Japan Investment August 2016


Japan: Machinery orders decline in August

October 12, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the first time in three months in August. Headline machinery orders (private sector, excluding volatile orders) fell 2.2% in August from the previous month in seasonally-adjusted terms, which contrasted the 4.9% increase recorded in July. The result surprised market analysts who had expected a sharper 4.7% decrease.

Both overall manufacturing orders and non-manufacturing books contracted in August. Export orders swung to an expansion in August after declining in July.

Compared to the same month of the previous year, core machinery orders expanded 11.6% in August, which followed the 5.2% increase observed in July and was the fastest growth rate since June 2015. As a result of August’s annual expansion, the trend continues pointing upward. The annual average variation in core machinery orders rose from July’s 0.3% to 0.7%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 0.4% in 2016, which is up 0.1 percentage points from last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.1%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 0.6% in 2016, which is up 0.3 percentage points from 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 August 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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