Japan Investment June 2016

Japan

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%.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 0.7% in 2016, which is down 0.2 percentage points over last month’s projection. In 2017, the panel sees private non-residential investment expanding 1.4%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 0.1% in 2016, which is down 0.2 percentage points over last month’s projection. In 2017, the panel sees gross fixed investment growth at 0.9%.


Author: Ricard Torné, Head of Economic Research

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Japan Investment June 2016 0

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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