Japan: Machinery orders decline in May
July 11, 2018
Although core machinery orders—a leading indicator of capital spending over a three- to six-month period—contracted in May, the fall was weaker-than-expected, suggesting that capital expenditure will gain steam further down the road. Headline machinery orders (private sector, excluding volatile orders) fell 3.7% in May from the previous month in seasonally-adjusted terms, contrasting the 10.1% rise in April. The print, however, was above the 5.5% drop that market analysts had expected.
Growth in overall manufacturing orders declined sharply in May following April’s outstanding result. Growth in non-manufacturing orders was broadly unchanged. Growth in export orders slowed in May, but still represented the second consecutive rise.
Compared to the same month of the previous year, core machinery orders increased 16.5% in May, following the 9.6% year-on-year rise in April. The annual average variation in core machinery orders rose from minus 0.3% in April to plus 0.8% in April.
Japan Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.7% in 2018, which is down 0.4 percentage points over last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.2%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.5% 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%.