Japan: Core machinery orders grow at fastest rate in 24 years in October
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—rocketed 17.1% month-on-month in seasonally-adjusted terms in October (September: -4.4% mom). October’s print marked the best result since October 1996.
On an annual basis, machinery orders rebounded notably, rising 2.8% in October (September: -11.5% yoy), the best result since November 2019. Moreover, the trend improved notably, with the annual average variation of machinery orders coming in at minus 8.4%, up from September’s minus 9.0% reading.
Looking ahead, economists at Nomura preached caution regarding October’s stellar reading:
“We question the sustainability of this powerful growth in orders shown in October. Covid-19 cases headed up more rapidly again from October in Europe and the US, and Japan was also hit by a third wave in November. This has put downward pressure on economic activity, and it looks increasingly likely that corporate capex could weaken too.”