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Japan: Machinery orders expand for second consecutive month in November

January 16, 2013

Machinery orders, a leading indicator of capital spending over a three to six month period, expanded for the second month in a row in November. Core machinery orders (private sector, excluding volatile orders) rose a seasonally adjusted 3.9% over the previous month, following the 2.6% increase tallied in October. In addition, the print widely overshot market expectations that had orders rising only 0.3%.

Overall manufacturing orders rebounded in November, while the non-manufacturing category continued to gain momentum. Moreover, machinery orders from overseas, which determine future exports, expanded a healthy 17.0%.

Compared to the same month the year before, core machinery orders rose 0.3% in November, after climbing 1.2% in October. Despite the positive reading, the trend now points downwards, with annual average growth in core machinery orders falling from plus 0.7% in October to minus 0.1% in November.

As a result, the Cabinet Office maintained its assessment on machinery orders, stating that the trend "is weakening". That said, the Office predicts a 5.0% rise in the fourth quarter, contrasting the 1.1% drop posted in the third.


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Japan Investment November 2012

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.


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