Japan: Machinery orders flat in November
January 16, 2019
Core machinery orders, a leading indicator for capital spending over a three- to six-month period, stalled in November, suggesting that firms may trim capital expenditure in the coming months. Headline machinery orders (private sector, excluding volatile orders) were flat over the previous month in seasonally-adjusted terms in November, following the 7.6% increase in October. The print missed the 3.5% gain expected by market analysts.
Overall manufacturing orders contracted in November, while growth in non-manufacturing books orders slowed. On the upside, overseas orders, which are not included in core machinery orders, expanded at a faster clip in November. Masaki Kuwahara and Takashi Miwa, analysts at Nomura, warn that:
“November orders included four large orders valued at over ¥10bn, meaning that November orders should not be seen as representing an overarching trend, but they nevertheless suggest that the global economy is comparatively resilient.”
Compared to the same month of the previous year, core machinery orders rose 0.8% in November, following October’s 4.5% increase. The annual average variation in core machinery orders fell from 3.3% in October to 3.1% in November.
Japan Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.0% in 2019, which is unchanged over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.5%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2019, which is unchanged over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.9%.