Japan Investment March 2017


Japan: Machinery orders increase again in April

May 17, 2017

Although core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded for the second consecutive month in March, they weakened in Q1 compared to Q4 2016, suggesting that businesses investment likely weakened in the three months up to March. The Cabinet maintained its basic assessment on machinery orders, stating that while orders had been picking up, they have now come to a standstill. Headline machinery orders (private sector, excluding volatile orders) rose 1.4% in March from the previous month in seasonally adjusted terms, which followed the 1.5% increase in February. The print undershot the 2.1% rise that market analysts had expected.

Growth in overall manufacturing orders softened in March, while non-manufacturing books dipped into the red. Export orders declined further in March, suggesting that the pickup in global demand could be coming to an end.

Compared to the same month of the previous year, core machinery orders decreased 0.7% in March, which contrasted the 5.6% increase in February. The annual average variation in core machinery orders rose declined a 1.0% increase in February to a 0.5% rise in March.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.9% in 2017, which is up 1.0 percentage points over last month’s projection. In 2018, the panel sees private non-residential investment expanding 2.0%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2017, which is up 0.2 percentage points over last month’s projection. In 2018, the panel sees gross fixed investment growth at 1.5%.

Author: Ricard Torné, Lead Economist

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Japan Investment Chart

Japan Investment March 2017

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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