Japan: Machinery orders accelerate in May as reconstruction gains steam
July 7, 2011
Machinery orders, a leading indicator of capital spending over a three to six month period, surprised on the upside in May, which signals that companies resumed investment and began to undertake rebuilding efforts. In May, core machinery orders (private sector, excluding volatile orders) expanded a seasonally adjusted 3.0% over the previous month, which contrasted the previous month's 3.3% contraction and beat market forecasts that had orders gaining 2.6%. Compared to the same month last year, core machinery orders climbed 10.5%, which contrasted the mild 0.2% decline tallied in the previous month. The May increase was the result of a marked expansion in non-manufacturing orders, in particular from the sectors that were expected to benefit from the post-quake rebuilding process. Electricity supply and construction were among the best performers, soaring 140.7% and 41.5% respectively. The latest outturn bodes well for investment growth in the months ahead.