Japan Investment April 2019

Japan

Japan: Machinery orders expand at the fastest pace in six months in April

June 12, 2019

Core machinery orders, a leading indicator for capital spending over a three- to six-month period, posted the third consecutive increase in April, suggesting that capital expenditure was normalizing before the new escalation in the trade war between China and the United States took place in late April. Headline machinery orders (private sector, excluding volatile orders) expanded 5.2% over the previous month in seasonally-adjusted terms in April, following the 3.8% rise in March. The print contrasted the 5.3% decrease expected by market analysts.

Overall manufacturing books rebounded strongly in April, while non-manufacturing orders expanded at a weaker pace. Moreover, export orders posted a large decline in April following two consecutive expansions.

Compared to the same month of the previous year, core machinery orders rose 2.5% in April, contrasting March’s 0.7% decrease. The annual average growth in core machinery orders rose from 2.3% in March to 2.8% in April.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.1% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.6% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.9%.


Author: Ricard Torné, Lead Economist

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Japan Investment April 2019

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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