Japan Investment September 2016


Japan: Machinery orders decline again in September

November 10, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the second consecutive month in September, suggesting slowing momentum in capital expenditure. Headline machinery orders (private sector, excluding volatile orders) fell 3.3% in September from the previous month in seasonally-adjusted terms, which followed the 2.2% decrease recorded in August. The result surprised market analysts who had expected a softer 1.5% drop.

The decline in overall manufacturing orders quickened in September, while non-manufacturing books recorded a milder contraction. Export orders expanded for the second consecutive month in September, albeit at a weaker rate.

Compared to the same month of the previous year, core machinery orders expanded 4.3% in September, which followed the 11.6% increase observed in August. As a result of September’s annual expansion, the trend continues pointing upward. The annual average variation in core machinery orders rose from August’s 0.7% to 1.4%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 0.4% in 2016, which is unchanged from last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.0%, which is down 0.1 percentage points from last month’s estimate. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 0.6% in 2016, which is unchanged from last month’s projection. In 2017, the panel sees gross fixed investment growth at 1.2%, which is also unchanged from last month’s forecast.

Author: Ricard Torné, Lead Economist

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Japan Investment Chart

Japan Investment September 2016

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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