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Japan: Machinery orders expand at fastest pace in six months in November

January 16, 2014

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) recorded their largest increase since May 2013, signaling that business may bolster investment. Headline machinery orders (private sector, excluding volatile orders) rose 9.3% over the previous month in seasonally-adjusted terms in November 2013, following the 0.6% increase recorded in October. November's increase was well above the 1.1% rise that market analysts had expected.

Overall, non-manufacturing books recorded a healthy expansion, while manufacturing orders rebounded in November. Machinery orders from overseas, which determine future exports, recorded a second consecutive contraction.

Compared to the same month of the previous year, core machinery orders rose 16.7% in November. The increase was below the 17.8% rise recorded in October, which had represented the largest rise since June 2011. The trend continues to point upward; annual average growth in core machinery orders rose from 3.7% in October to 4.9% in November.

The Cabinet Office upgraded its assessment of machinery orders and stated that, "machinery orders are increasing as a trend," where it had previously said, "orders are picking up." In addition, the Office predicted a 2.1% drop in the fourth quarter following an expansion of 4.3% in the third quarter.

FocusEconomics Consensus Forecast panelists expect investment to rise 3.3% in 2014, which is unchanged over last month's projection. In 2015, the panel sees investment expanding 2.7%.


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Japan Investment November 2013

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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