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Japan Investment December 2022

Japan: Core machinery orders bounce back in December

Core machinery orders—which cover the private sector, exclude volatile orders and are a leading indicator for capital spending over the coming three-to-six-month period—increased 1.6% in month-on-month seasonally adjusted terms in December, which contrasted November’s 8.3% decrease.

On an annual basis, machinery orders plunged 6.6% in December (November: -3.7% yoy), the worst result since February 2021. Meanwhile, annual average machinery orders growth fell to 5.2% in December (November: +6.4%). This signals a worsening trend in the sector.

December’s print means that core machinery orders fell 5.0% in Q4 as a whole in sequential terms. The statistical release also provided an official forecast for growth of core machinery orders in Q1 2023. It forecast that core machinery orders would rise 4.3%. This suggests that, after contracting in Q4, fixed investment will rebound in Q1 2023.

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