Japan Investment July 2016


Japan: Machinery orders decelerate in July

September 12, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded for the second consecutive month in July, signaling a gradual recovery of the Japanese economy. Headline machinery orders (private sector, excluding volatile orders) rose 4.9% in July over the previous month in seasonally-adjusted terms, which followed the 8.3% increase recorded in June. The result surprised market analysts who had expected a 3.1% decrease.

While overall manufacturing orders decelerated markedly in July, non-manufacturing books accelerated in the same month. Export orders swung to a contraction in July after expanding in June.

Compared to the same month of the previous year, core machinery orders expanded 5.2% in July, which contrasted the 0.9% decline observed in June and was the fastest growth rate since January. As a result of July’s expansion, the trend is now pointing upward. The annual average variation in core machinery orders rose from June’s minus 0.5% to minus 0.3%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 0.3% in 2016, which is down 0.4 percentage points over last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.2%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 0.3% in 2016, which is up 0.2 percentage points over last month’s projection. In 2017, the panel sees gross fixed investment growth at 0.9%.

Author: Ricard Torné, Lead Economist

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Japan Investment July 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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