Core machinery orders (a leading indicator of capital spending over a three- to six-month period) rebounded strongly in January after having recorded the largest drop since October 1992 the month before. Headline machinery orders (private sector, excluding volatile orders) jumped 13.4% over the previous month in seasonally-adjusted terms in January, which contrasted the 15.7% drop recorded in December and marked the largest expansion since March 2013. January's increase nearly doubled the 7.1% expansion that market analysts had expected. Both overall manufacturing and non-manufacturing orders rebounded in January, with manufacturing books registering the fastest acceleration in 29 months. Conversely, machinery orders from overseas, which determine future exports, slowed in the same month. Compared to the same month last year, core machinery orders soared 23.6% in January. The increase was well above the 6.7% rise recorded in December and marked the highest reading since August 2010. The trend is pointing upward again; annual average growth in core machinery orders rose from 5.8% in December to 7.9% in January. The Cabinet Office maintained its assessment of machinery orders and stated that, “machinery orders are on an uptrend.” The Office did, however, predict that there will be a 2.9% drop in the first quarter following on the 1.5% expansion in the final quarter of 2013. FocusEconomics Consensus Forecast panelists expect investment to rise 4.1% in 2014, which is unchanged over last month's projection. In 2015, the panel sees investment expanding 3.9%.
Machinery orders rebound to 10-month high in January
March 13, 2014
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Japan Investment Chart
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.
Japan Economic News
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