Japan: Machinery orders rebound sharply in July
September 13, 2018
Core machinery orders, a leading indicator for capital spending over a three- to six-month period, rebounded strongly in July, expanding at the fastest pace since January 2016 and suggesting that capital expenditure will boost overall economic growth further down the road. Headline machinery orders (private sector, excluding volatile orders) expanded 11.0% in July from the previous month in seasonally-adjusted terms, contrasting the 8.8% drop in June. The print was well above the 5.7% increase expected by market analysts.
A broad-based expansion in demand drove the result, with both manufacturing and non-manufacturing orders rebounding strongly in July. Overseas demand also improved as export orders rose at a double-digit pace in July.
Compared to the same month of the previous year, growth in core machinery rose from 0.3% in June to 13.9% in July. The annual average variation in core machinery orders rose from 1.3% in June to 2.9% in July.
Japan Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.7% in 2018, which is down 0.4 percentage points from last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.2%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.5% in 2018, which is down 0.2 percentage points from last month’s projection. In 2019, the panel sees gross fixed investment growth at 1.4%.