Japan: Machinery orders rebound sharply in January following December's plunge
March 14, 2018
Core machinery orders—a leading indicator of capital spending over a three to six month period—recovered in January some of the ground lost in December, when core machinery orders contracted at the fastest pace in over three years. That said, the Cabinet Office kept its assessment unchanged, stating that “machinery orders show signs of picking up.” Headline machinery orders (private sector, excluding volatile orders) expanded 8.2% in January from the previous month in seasonally-adjusted terms, contrasting the sharp 9.3% drop in December. The print came in above the 5.6% rise that market analysts had expected.
Overall, manufacturing orders rebounded sharply in January, while the recovery in non-manufacturing books was more moderate. Export orders rebounded in January, underling the ongoing strong momentum in global trade.
Compared to the same month of the previous year, core machinery orders rose 2.9% in January, an improvement from the 5.0% drop recorded in December. The annual average variation in core machinery orders rose from minus 1.1% in December to minus 0.4% in January.
Japan Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 3.0% in 2018, which is unchanged over last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.1%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.9% in 2018, which is up 0.1 percentage points over last month’s projection. In 2019, the panel sees gross fixed investment growth at 1.3%.