Japan Investment February 2016


Japan: Machinery orders contract in February

April 11, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) contracted in February, following January’s multi-year surge, as businesses are increasingly worried about the strength of the yen. Headline machinery orders (private sector, excluding volatile orders) fell 9.2% in February over the previous month in seasonally-adjusted terms, which contrasted the 15.0% increase recorded in January. That said, the drop was above the 12.4% decline that market analysts had expected.

Overall manufacturing orders contracted a sharp 30.6% in February, while growth in non-manufacturing books accelerated. Export orders rebounded in February, after contracting at the fastest pace in 18 months in January.

Compared to the same month of the previous year, core machinery orders fell 0.4% in February, which contrasted the 8.4% decrease tallied in the previous month. As a result of February’s decline, the trend now points downward, with annual average growth in core machinery orders falling from January’s 4.5% to 4.0%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.4% in 2016, which is unchanged over last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.7%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.4% in 2016, which is down 0.2 percentage points over last month’s projection. In 2017, the panel sees gross fixed investment growth at 1.2%.

Author: Ricard Torné, Lead Economist

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Japan Investment February 2016 0

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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