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Japan Investment February 2018

Japan: Machinery orders lose steam in February

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.

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