Japan Investment January 2017


Japan: Machinery orders drop at outset of year

March 13, 2017

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) fell in January, casting doubts about the sustainability of the Japanese recovery. Nevertheless, the Cabinet maintained its basic assessment on machinery orders, stating that while orders had been picking up, they have now come to a standstill. Headline machinery orders (private sector, excluding volatile orders) fell 3.2% in January from the previous month in seasonally adjusted terms, which contrasted the 2.1% increase recorded in December.

Overall manufacturing orders contracted at the fastest pace in nearly one year in January, while growth in overall non-manufacturing books eased. Export orders rebounded in January, signaling strengthening global demand.

Compared to the same month of the previous year, core machinery orders decreased 8.2% in January, which contrasted the 6.7% rise in December. The annual average variation in core machinery orders fell from a 1.7% increase in December to a 0.5% rise in January.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 1.3% in 2017, which is up 0.3 percentage points over last month’s projection. In 2018, the panel sees private non-residential investment expanding 1.7%.

Author: Ricard Torné, Lead Economist

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Japan Investment Chart

Japan Investment January 2017

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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