Japan: Machinery orders tumble in October
December 11, 2014
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) contracted in October, casting shadows over the strength of investment to support growth in the coming months. Headline machinery orders (private sector, excluding volatile orders) contracted 6.4% in October over the previous month, in seasonally-adjusted terms, which contrasted the 2.9% increase recorded in September. The print undershot market analysts’ forecasts for a decrease of 2.4% and represented a five-month low.
Overall manufacturing orders declined in October, while non-manufacturing books fell at the sharpest pace in five months. Export orders declined in the same month, albeit at a slower rate.
Compared to the same month last year, core machinery orders fell 4.9% in October, which contrasted the 7.3% increase tallied in the previous month. As a result, the trend continued to point downward; annual average growth in core machinery orders decreased from 7.7% in September to 6.0% in October, which represented a 10-month low.
Despite October’s significant deterioration, the Cabinet Office maintained its assessment of machinery orders, stating that they are in, “a gradual pick-up move.” Businesses surveyed by the Cabinet Office predict that there will be a 0.3% drop in the fourth quarter, contrasting the 5.6% increase tallied in the third quarter.