Japan Investment

Japan

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.

FocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 5.6% in 2014, which is down 0.5 percentage points over last month’s projection. In 2015, the panel sees private non-residential investment expanding 2.1%, which is also down 0.5 percentage points from last month’s estimate. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 4.3% in 2014, which is down 0.4 percentage points over last month’s projection. In 2015, the panel sees gross fixed investment growth at 0.8%, which is down 0.3 percentage points from last month’s estimate.


Author: Ricard Torné, Head of Economic Research

Sample Report

Looking for forecasts related to Investment in Japan? Download a sample report now.

Download

Japan Investment Chart


Japan Investment October 2014

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.


Japan Economic News

More news

Search form