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Japan Investment December 2023

Japan: Core machinery orders record quickest growth since April 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—grew 2.7% month-on-month in seasonally adjusted terms in December (November: -4.9% mom). December’s print marked the best reading since April, but still meant that over Q4 as a whole, core machinery orders contracted 1.0% compared to Q3.

On an annual basis, machinery orders fell at a softer rate of 0.7% in December (November: -5.0% yoy), the best result since February. Moreover, the trend improved, with the annual average variation of machinery orders coming in at minus 3.6% in December, up from November’s minus 4.1% reading.

In its accompanying forecast, the statistical office said it expected core machinery orders to rise 4.6% in Q1 compared to Q4. This is in line with our panelists’ expectation that fixed investment will rebound in Q1 after having contracted in Q4.

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