Machinery orders, a leading indicator of capital spending over a three to six month period, contracted in August for the first time in three months. Core machinery orders (private sector, excluding volatile orders) fell a seasonally adjusted 3.3% over the previous month, contrasting the 4.6% rise tallied in July. In addition, the print exceeded market expectations that had orders declining a softer 2.3%. Manufacturing orders fell sharply into the red in August, while the non-manufacturing category bounced back. Moreover, machinery orders from overseas, which determine future exports, plummeted 14.7%. Compared to the same month last year, core machinery orders contracted 6.1% in August, contrasting the 1.7% rise observed in July. Accordingly, the trend continued to point downwards, with annual average growth in core machinery orders falling from 3.2% in July to 2.6%. Against this backdrop, the Cabinet Office maintained its assessment on machinery orders, stating that the trend "is moving sideways". In addition, the Office predicts a 1.2% drop in the third quarter, following the 4.1% contraction posted in the second.
Machinery orders fall in August
October 11, 2012
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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.
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