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Japan: Machinery orders increased for fourth consecutive month in September

November 13, 2014

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded in September for the fourth consecutive month, suggesting that investment remains strong. Headline machinery orders (private sector, excluding volatile orders) expanded 2.9% in September over the previous month in seasonally-adjusted terms, which followed the 4.7% increase recorded in August. The print contrasted market analysts’ forecasts for a decrease of 1.2%.

Overall manufacturing orders rebounded in September, while non-manufacturing books slowed. In addition, export orders declined in the same month.

Compared to the same month last year, core machinery orders expanded 7.3% in September, which contrasted the 3.3% increase tallied in August. Nevertheless, the trend continued to point downward; annual average growth in core machinery orders decreased from 8.1% in August to 7.7% in September, which represented a nine-month low.

The Cabinet Office maintained its assessment of machinery orders, stating that they are in, “a gradual pick-up move.” In addition, businesses surveyed by the Cabinet Office predict that there will be a 0.3% drop in the fourth quarter, contrasting the 5.6% increase tallied in the third quarter.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 8.1% in 2014, which is down 0.5 percentage points over last month’s projection. In 2015, the panel sees private non-residential investment expanding 3.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 5.5% in 2014, which is up 0.1 percentage points over last month’s projection. In 2015, the panel sees gross fixed investment growth at 1.2%


Author: Ricard Torné, Head of Economic Research

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Japan Investment September 2014

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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