Japan: Machinery orders record a mild rebound in October
December 11, 2013
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) rebounded slightly in October, suggesting that business investment is reviving. Headline machinery orders (private sector, excluding volatile orders) rose 0.6% over the previous month in seasonally-adjusted terms, contrasting the 2.1% drop in September. The increase was a tad short of the 0.7% rise that market analysts had expected.
Overall non-manufacturing books experienced a strong rebound in October, whereas manufacturing orders contracted. Machinery orders from overseas, which determine future exports, declined at the fastest pace since June.
Compared to the same month last year, core machinery orders rose 17.8% in October, which was above the 11.4% rise recorded in the previous month and represented the largest increase since June 2011. The trend continues to point upward; annual average growth in core machinery orders rose from 2.5% in September to 3.7% in October.
The Cabinet Office maintained its assessment of machinery orders and stated that, "machinery orders are picking up." In addition, the Office predicted a 2.1% drop in the fourth quarter, following an expansion of 4.3% in the third quarter.
FocusEconomics Consensus Forecast panelists expect investment to rise 0.2% in 2013, which is up 0.1 percentage points over last month's projection. In 2014, the panel sees investment expanding 3.3%, which is down 0.2 percentage points from last month's estimate.