Japan: Growth in machinery orders quickens in April
June 10, 2015
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded for the second consecutive month in April and marked a four-month high, thereby signaling that businesses are boosting investment in anticipation of stronger growth in the near future. Headline machinery orders (private sector, excluding volatile orders) expanded 3.8% in April over the previous month in seasonally-adjusted terms, which followed the 2.9% increase recorded in March. The result contrasted the 1.5% decrease that market analysts had expected.
While overall manufacturing orders expanded strongly in April, non-manufacturing books declined slightly in the same month. Export orders contracted again in April, suggesting that the positive impact of a weak currency may have started to fade.
Compared to the same month of last year, core machinery orders rose 3.0% in April, which marked a slight acceleration over the 2.6% increase tallied in the previous month. The trend continued to point downward, with annual average growth in core machinery orders swinging from plus 0.8% in March to minus 0.2% in April, which represented a 21-month low.
The Cabinet Office raised its assessment on machinery orders, stating that, “they are picking up,” compared to its previous view that orders were, “showing a gradual recovery.” Businesses surveyed by the Cabinet Office predict that there will be a sharp 7.4% decline in the second quarter, contrasting the 6.3% increase tallied in the first quarter.