Japan Investment February 2018

Japan

Japan: Machinery orders lose steam in February

April 11, 2018

Core machinery orders—a leading indicator of capital spending over a three to six month period—moderated in February following January’s solid rebound. Headline machinery orders (private sector, excluding volatile orders) expanded 2.1% in February from the previous month in seasonally-adjusted terms, easing from the 8.2% spike recorded in January. The print nevertheless surprised to the upside, contrasting market expectations of a 2.5% contraction. That said, the Cabinet Office kept its assessment unchanged, stating that “machinery orders show signs of picking up.” The consecutive expansion, which was driven by stronger manufacturing demand, points to a healthy boost in private investment.

Overall manufacturing orders posted a solid performance in February, while non-manufacturing orders were flat. Export orders, on the other hand, contracted in February.

Compared to the same month of the previous year, core machinery orders rose 2.4% in February, losing steam from the 2.9% expansion posted in January. The annual average variation in core machinery orders slid from minus 0.4% in January to minus 0.6% in February.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 3.1% in 2018, which is up 0.1 percentage points over last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.7% in 2018, which is down 0.2 percentage points from last month’s projection. In 2019, the panel sees gross fixed investment growth at 1.4%.


Author:, Economist

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Japan Investment February 2018 0

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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