Japan Investment


Machinery orders rebound strongly in August

Machinery orders, a leading indicator of capital spending over a three to six month period, recovered strongly in August, on the back of robust demand in industries such as electrical machinery and electronic information and communication equipment. In August, core machinery orders (private sector, excluding volatile orders) grew at their fastest rate in a year and jumped a seasonally adjusted 11.0% over the previous month. The August print contrasted the 8.2% contraction recorded in July and overshot market expectations that had orders increasing 3.9%. The expansion was the result of a marked improvement in manufacturing orders, whereas non-manufactory orders plummeted. In addition, overseas demand for machinery, which determines future shipments, rebounded strongly after falling for five consecutive months. Compared to the same month last year, core machinery orders rose 2.1% in August, which was below the 4.0% expansion recorded in the previous month, but well above the 3.6% decline expected by market analysts. Meanwhile, the Cabinet Office maintained its assessment that machinery orders are picking up as a trend and left its July-September forecast for core machinery orders unchanged at 0.9%.

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