Japan Investment July 2019

Japan

Japan: Machinery orders contract in July amid an uncertain global economic outlook

September 12, 2019

Core machinery orders, a leading indicator for capital spending over a three- to six-month period, slipped in July as global trade tensions continue to disrupt investment planning. Headline machinery orders (private sector, excluding volatile orders) declined 6.6% over the previous month in seasonally-adjusted terms in July, contrasting the 13.9% surge in June. The print, however, overshot the 9.9% decrease expected by market analysts.

Overall non-manufacturing books plummeted in July, while manufacturing orders posted a healthy rebound. Export orders posted a contraction in the same month amid waning global demand.

Compared to the same month of the previous year, core machinery orders expanded 0.3% in July, following June’s 12.5% increase. The annual average growth in core machinery orders fell from 2.0% in June to 1.2% in July.

FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.9%. In addition, FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.5% in 2019, which is up 0.4 percentage points over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.1%.


Author: Ricard Torné, Lead Economist

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Japan Investment July 2019

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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