Japan Investment


Machinery orders rebound less-than-expected in October

Machinery orders, a leading indicator of capital spending over a three to six month period, expanded for the first time in three months. Core machinery orders (private sector, excluding volatile orders) rose a seasonally adjusted 2.6% over the previous month, contrasting the 4.3% drop tallied in September. That said, the print came in below market expectations of a stronger 3.0% increase.

Overall manufacturing orders contracted in October, while the non-manufacturing category bounced back. Moreover, machinery orders from overseas, which determine future exports, improved and rose 9.4%.

Compared to the same month the year before, core machinery orders expanded 1.2% in October, after contracting 7.8% in September. As a result, the trend stabilized, with annual average growth in core machinery orders remaining unchanged at September's 0.7%.

Despite the positive reading, the Cabinet Office downgraded its assessment on machinery orders, stating that the trend "is weakening". In addition, the Office predicts a 5.0% rise in the fourth quarter, contrasting the 1.1% drop posted in the third.

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Japan Investment Chart

Japan Investment October 2012

Note: Month-on-month changes of seasonally adjusted core machinery orders and year-on-year growth rate in %.
Source: Ministry of Economy, Trade and Industry (METI) and FocusEconomics calculations.

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