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Japan: Machinery orders in October expand at fastest pace in 19 months

December 9, 2015

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded in October for the second consecutive month, hitting a 19-month high and suggesting that capital expenditure is strengthening at the end of the year. Headline machinery orders (private sector, excluding volatile orders) expanded 10.7% in October over the previous month, in seasonally-adjusted terms, which followed the 7.5% increase recorded in September. The result contrasted the 1.5% decrease that market analysts had expected.

While overall manufacturing orders rebounded strongly in October, growth in non-manufacturing books eased slightly in the same month. In addition, export orders soared and hit a 16-month high in October.

Compared to the same month last year, core machinery orders expanded 10.3% in October. The print contrasted the 1.7% drop tallied in the previous month. As a result of October’s improvement, the trend now points upward, with annual average growth in core machinery orders rising from September’s 3.0% to 4.1%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.0% in 2016, which is unchanged over last month’s projection. In 2017, the panel sees private non-residential investment expanding 2.1%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.3% in 2016, which is unchanged over last month’s projection. In 2017, the panel sees gross fixed investment growth at 1.2%.


Author: Ricard Torné, Head of Economic Research

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