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Japan: Machinery orders remain subdued

September 12, 2013

Core machinery orders (a leading indicator of capital spending over a three- to six-month period) improved slightly in July, although the result undershot market expectations. Headline machinery orders (private sector, excluding volatile orders) were flat compared to the previous month in seasonally-adjusted terms, following the 2.7% drop in June. The print was well below the 2.4% increase market analysts had expected.

Overall manufacturing orders expanded strongly in July, while non-manufacturing books recorded zero growth. Machinery orders from overseas, which determine future exports, recorded a mild gain.

Compared to the same month last year, core machinery orders rose 6.5% in July, which was above the 4.9% rise recorded in the previous month. The trend continues to point upward, with annual average growth in core machinery orders rising from minus 1.1% in June to minus 0.7% in July.

The Cabinet Office maintained its assessment on machinery orders, stating that, "machinery orders are picking up moderately." In addition, the Office predicted a 5.3% drop in the third quarter, following an expansion of 6.8% in the second quarter.

FocusEconomics Consensus Forecast panelists expect investment to fall 0.8% in 2013, which is down 0.4 percentage points over the previous month's projection. In 2014, the panel sees investment expanding 3.4%.


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Japan Investment July 2013

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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