Japan: Machinery orders contract in March
May 17, 2018
Core machinery orders—a leading indicator of capital spending over a three to six month period—declined in March for the first time in three months. Headline machinery orders (private sector, excluding volatile orders) fell 3.9% in March from the previous month in seasonally-adjusted terms, contrasting the 2.1% rise in February. The print surprised to the downside as market analysts expected a softer 3.0% contraction. That said, the Cabinet Office kept its assessment unchanged, stating that “machinery orders show signs of picking up.”
Overall manufacturing orders posted a sharp decline in March, while non-manufacturing orders increased slightly. Export orders, on the other hand, contracted again in March, casting doubts on the strength of global demand.
Compared to the same month of the previous year, core machinery orders fell 2.4% in March, contrasting February’s 2.4% expansion. The annual average variation in core machinery orders slid from minus 0.6% in February to minus 0.8% in March.
Japan Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 3.1% in 2018, which is up 0.1 percentage points over last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2018, which is down 0.2 percentage points from last month’s projection. In 2019, the panel sees gross fixed investment growth at 1.4%.