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%.