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Japan Investment February 2023

Japan: Core machinery orders dip in February

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—dropped 4.5% month-on-month in seasonally-adjusted terms in February (January: +9.5% mom). The fall was less severe than the market had expected. 

On an annual basis, machinery orders rose at a quicker rate of 9.8% in February (January: +4.5% yoy), the best result since July 2022. Accordingly, annual average machinery orders growth rose to 5.6% in February (January: +5.2%). This signals an improving trend in the sector.

Despite the decline, core machinery orders in January–February are still up 4.7% compared to Q4 2022, broadly matching the statistical office’s February forecast of 4.3% for Q1 2023. This suggests that fixed investment is still likely to have rebounded in Q1 2023 after having contracted in Q4 2022.

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