Japan: Machinery orders rebound in March
May 18, 2015
Although core machinery orders (a leading indicator of capital spending over a three- to six-month period) rebounded in March, analysts warn that capital spending remains weak. Headline machinery orders (private sector, excluding volatile orders) expanded 2.9% in March over the previous month in seasonally-adjusted terms, which contrasted the 1.4% decline recorded in February (previously reported: -0.4% month-on-month). The result was stronger than the 1.5% increase that market analysts had expected.
While overall manufacturing orders rebounded timidly in March, non-manufacturing books recorded a healthy expansion in the same month. Export orders contracted sharply in March, suggesting that the positive impact of a weak yen may have started to fade.
Compared to the same month of last year, core machinery orders rose 2.6% in March, which marked a deceleration over the 5.9% increase tallied in the previous month. The trend continued to point downward, with annual average growth in core machinery orders falling from 2.4% in February to 0.8% in March, which represented a 19-month low.
The Cabinet Office maintained its assessment on machinery orders, stating that, “they are in a gradual recovery.” Businesses surveyed by the Cabinet Office predict that there will be a sharp 7.4% decline in the second quarter, contrasting the 6.3% increase tallied in the first quarter.