Japan Investment April 2017


Japan: Machinery orders contract in April

June 12, 2017

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the first time in three months in April, casting doubts on the robustness of firms’ capital spending. Nevertheless, the Cabinet maintained its basic assessment on machinery orders, stating that while orders had been picking up, they have now come to a standstill. Headline machinery orders (private sector, excluding volatile orders) fell 3.1% in April from the previous month in seasonally adjusted terms, which contrasted the 1.4% increase in March. The print undershot the 1.3% drop that market analysts had expected.

Growth in overall manufacturing orders accelerated in April, while non-manufacturing books contracted sharply. Export orders rebounded strongly in April, following two consecutive declines.

Compared to the same month of the previous year, core machinery orders rose 2.7% in April, which contrasted the 0.7% decrease in March. The annual average variation in core machinery orders rose from 0.5% in March to 1.4% in April.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.7% in 2017, which is up 0.2 percentage points over last month’s projection. In 2018, the panel sees private non-residential investment expanding 1.9%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 2.3% in 2017, which is up 0.1 percentage points over last month’s projection. In 2018, the panel sees gross fixed investment growth at 1.7%.

Author: Ricard Torné, Lead Economist

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Japan Investment April 2017

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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