Japan Investment November 2015


Japan: Machinery orders plummet in November

January 14, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) dropped at the fastest pace in 18 months in November, adding to concerns about robustness of all-important capital expenditure. Headline machinery orders (private sector, excluding volatile orders) fell 14.4% in November over the previous month, in seasonally-adjusted terms, which contrasted the 10.7% increase recorded in October. The result exceeded the 7.9% decrease that market analysts had expected.

While both overall manufacturing orders and non-manufacturing books contracted at double-digit rates in November, the latter experienced the largest decline since 2004. In addition, export orders contracted a sharp 25.0%.

Compared to the same month of the previous year, core machinery orders expanded 1.2% in November, which followed the 10.3% increase tallied in the previous month. Despite November’s deterioration, the trend continues to point upward, with annual average growth in core machinery orders rising from October’s 4.1% to 5.4%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.0% in 2016, which is down 0.1 percentage points over last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.9%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.4% in 2016, which is up 0.1 percentage points over last month’s projection. In 2017, the panel sees gross fixed investment growth at 1.2%.

Author: Ricard Torné, Lead Economist

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Japan Investment November 2015

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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