Japan Investment


Machinery orders remain strong in December

Core machinery orders, a leading indicator of capital spending over a three to six month period, expanded for the third month in a row in December. Headline machinery orders (private sector, excluding volatile orders) rose a seasonally adjusted 2.8% over the previous month, following the 3.9% increase tallied in November. In addition, the print contrasted market expectations that had orders dropping 0.7%.

Overall manufacturing orders remained strong in December, while the non-manufacturing category contracted. Moreover, machinery orders from overseas, which determine future exports, declined a sharp 12.6%.

Compared to the same month the year before, core machinery orders fell 3.4% in December, after rising a mild 0.3% in November. In the full year 2012, core machinery orders fell 0.9%, which contrasts the 7.8% expansion tallied in 2011.

As a result, the Cabinet Office upgraded its assessment on machinery orders, stating that the trend "shows signs of a moderate pick-up". In addition, the Office predicts a 0.8% rise in the first quarter this year, following the 2.0% increase posted in the fourth quarter of 2012.

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Japan Investment Chart

Japan Investment December 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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