Japan Investment February 2019


Japan: Machinery orders rebound in February

April 10, 2019

Core machinery orders, a leading indicator for capital spending over a three- to six-month period, posted the first increase in fourth months in February but missed market expectations, suggesting that capex will likely remain subdued in the months ahead. Headline machinery orders (private sector, excluding volatile orders) expanded 1.8% over the previous month in seasonally-adjusted terms in February, contrasting the 5.4% drop in January. The print was below the 2.5% increase expected by market analysts.

Overall manufacturing orders expanded strongly in February, while non-manufacturing books posted a smaller month-on-month decline. Export orders rebounded markedly in the same month, amid improving trade negotiations between China and the United States.

Compared to the same month of the previous year, core machinery orders fell 5.5% in February, following January’s 2.9% decrease. The annual average growth in core machinery orders fell from 3.2% in January to 2.6% in February.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.1% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.6% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.9%.

Author: Ricard Torné, Lead Economist

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Japan Investment Chart

Japan Investment February 2019

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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