Japan: Machinery orders expand again in August
October 10, 2018
Core machinery orders, a leading indicator for capital spending over a three- to six-month period, expanded for the second consecutive month in August, suggesting that capital expenditure will boost overall economic growth further down the road. Headline machinery orders (private sector, excluding volatile orders) expanded 6.8% in August from the previous month in seasonally-adjusted terms, following the 11.0% increase in July. The print was above the 4.0% increase expected by market analysts.
Although growth in both manufacturing and non-manufacturing orders slowed in August, the print was still robust. Overseas demand also improved as growth in export orders accelerated in August.
Compared to the same month of the previous year, growth in core machinery slowed from 13.9% in July to 12.6% in August. The annual average variation in core machinery orders rose from 2.9% in July to 3.5% in August.
Japan Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.7% in 2018, which is down 0.4 percentage points from 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%.