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Japan: Machinery orders contract for first time in three months

May 16, 2012

Machinery orders, a leading indicator of capital spending over a three to six month period, deteriorated for the first time so far this year. In March, core machinery orders (private sector, excluding volatile orders) contracted a seasonally adjusted 2.8% over the previous month, which contrasted the 2.8% rise recorded in February (previously reported: +4.8% month-on-month). Nevertheless, the print overshot market expectations that had orders declining 3.5%. The deceleration was the result of an outright contraction in manufacturing orders, particularly in chemical products, while non-manufacturing bookings recorded a softer drop. However, machinery orders from overseas, which determine future exports, continued to decline in March. Compared to the same month last year, core machinery orders fell 1.1% in March, which contrasted both the 8.9% rise observed in February and the 4.4% expansion expected by market analysts. Accordingly, the trend deteriorated in March, with annual average growth falling from 7.6% in February to 6.2% in March. According to the survey, the Cabinet Office predicts a 2.5% expansion in the second quarter, after the 0.9% rise posted in the first three months of this year. Meanwhile, the Cabinet Office maintained its assessment on machinery orders, envisaging


Author: Ricard Torné, Head of Economic Research

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Japan Industry March 2012

Note: Month-on-month changes of seasonally adjusted core machinery orders and year-on-year growth rate in %.
Source: Ministry of Economy, Trade and Industry (METI) and FocusEconomics calculations.


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