Japan: Machinery orders contract in December

Core machinery orders, a leading indicator for capital spending over a three- to six-month period, declined marginally in December, suggesting that firms may keep capital expenditure subdued in the coming months. Headline machinery orders (private sector, excluding volatile orders) declined 0.1% over the previous month in seasonally-adjusted terms in December, following the flat reading in November. The print, however, was above the 1.1% decrease expected by market analysts.

Although the contraction in overall manufacturing orders accelerated in December, growth in non-manufacturing books gained steam. Export orders declined markedly in December, in parallel with slowing global demand.

Compared to the same month of the previous year, core machinery orders rose 0.9% in December, following November's 0.8% increase. The annual average variation in core machinery orders rose from 3.1% in November to 3.6% in December.

Japan Fixed Investment Forecast

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.0% in 2019, which is unchanged over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.5%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2019, which is unchanged over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.9%.