Japan: Machinery orders expand for first time in three months
October 10, 2013
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) improved markedly in August, posting the first increase in three months. Headline machinery orders (private sector, excluding volatile orders) expanded 5.4% over the previous month is seasonally-adjusted terms, following the flat reading tallied in July. The increase more than doubled the 2.5% rise market analysts had expected.
Overall manufacturing orders slowed in August, while non-manufacturing books experienced a strong increase. Machinery orders from overseas, which determine future exports, jumped to a five-month high.
Compared to the same month last year, core machinery orders rose 10.3% in August, which was above the 6.5% rise recorded in the previous month. The trend continues to point upward, with annual average growth in core machinery orders swinging from minus 0.7% in July to plus 0.5% in August.
The Cabinet Office upgraded its assessment on machinery orders, stating that, "machinery orders are picking up," instead of saying that they are, "picking up moderately" as in its previous statement. 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 rise 0.3% in 2013, which is up 1.1 percentage points over last month's projection. In 2014, the panel sees investment expanding 3.2%, which is down 0.2 percentage points from last month's estimate.