Japan: Machinery orders rebounded in June
August 10, 2016
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) rose sharply in June and suggest that Japanese firms are willing to increase capital expenditure despite a strong yen. Headline machinery orders (private sector, excluding volatile orders) rose a sharp 8.3% in June over the previous month in seasonally-adjusted terms, which contrasted the 1.4% decrease recorded in May. The result surprised market analysts who expected a 3.1% increase.
Both overall manufacturing orders and non-manufacturing books swung from a contraction in May to an expansion in June. Export orders swung to an expansion after declining in May.
Compared to the same month of the previous year, the contraction in core machinery orders eased from May’s 18-month low of 11.7% to 0.9% in June. Despite June’s softer drop, the trend deteriorated further, with the annual average variation in core machinery orders swinging from May’s plus 1.0% to minus 0.5%.