Japan: Machinery orders strongly rebound in April
June 11, 2018
Core machinery orders—a leading indicator of capital spending over a three- to six-month period—rebounded robustly in April following the first decline in three months in March. Headline machinery orders (private sector, excluding volatile orders) rose 10.1% in April from the previous month in seasonally-adjusted terms, reversing the 3.9% fall in March. The print represented the strongest acceleration since January 2016 and easily surpassed market expectations of a much softer 2.8% increase. April’s strong performance suggests capital expenditure could help shore up economic growth in Q2 following a contraction in Q1.
Manufacturing orders recovered in April to grow at a double-digit pace, while growth in non-manufacturing orders eased slightly. Export orders also rebounded sharply in April following two consecutive contractions.
Compared to the same month of the previous year, core machinery orders increased 9.6% in April, contrasting the 2.4% year-on-year decline in March. The annual average variation in core machinery orders improved from minus 0.8% in March to minus 0.3% in April.
Japan Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.7% in 2018, which is down 0.4 percentage points over last month’s projection. In 2019, the panel sees private non-residential investment expanding 2.2%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 1.5% in 2018, which is down 0.2 percentage points from last month’s projection. In 2019, the panel sees gross fixed investment growth at 1.4%.