Japan Investment October 2016


Japan: Machinery orders rebound in October

December 12, 2016

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) in Japan rose for the first time in three months in October. Headline machinery orders (private sector, excluding volatile orders) expanded 4.1% in October from the previous month in seasonally-adjusted terms, which contrasted the 3.3% decrease recorded in September. The result surprised market analysts who had expected a weaker 1.1% rise.

Overall non-manufacturing books returned to growth in October, while overall manufacturing orders declined at a softer pace in the same month. Export orders expanded for the third consecutive month in October, signaling that global growth is gradually improving.

Compared to the same month of the previous year, core machinery orders contracted 5.6% in October, which contrasted the 4.3% increase observed in September. As a result of October’s annual drop, the trend is now pointing downward. The annual average variation in core machinery orders fell from September’s 1.4% to 0.2%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 0.4% in 2016, which is unchanged from last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.0%, which is down 0.1 percentage points from last month’s estimate. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 0.6% in 2016, which is unchanged from last month’s projection. In 2017, the panel sees gross fixed investment growth at 1.2%, which is also unchanged from last month’s forecast.

Author: Ricard Torné, Lead Economist

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Japan Investment October 2016

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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