Machinery orders, a three to six month leading indicator of capital spending, dropped severely in February, even before the 11 March earthquake. In February, core machinery orders (private-sector, excluding volatile orders) contracted a seasonally adjusted 2.3% over the previous month, falling short of market expectations of a more moderate 0.9% decline and contrasting the previous month's expansion of a 4.2% expansion. In contrast, overall machinery orders, which include private sector, government and export orders, grew 1.9% over the previous month. The monthly drop was the result of a severe decline in non-manufacturing (-4.5% mom), particularly in transport, real estate and agriculture, which was mitigated by a 11.1% increase in manufacturing orders. Analysts expect that the March reading will begin to reflect the impact of the earthquake, as power and supply chain disruptions will drive machinery orders downwards.
Machinery orders plunge in February
April 10, 2011
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