Japan Investment


Japan: Machinery orders plummet in July due to rising yen and global uncertainties

September 8, 2011

Machinery orders, a leading indicator of capital spending over a three to six month period, deteriorated sharply in July, due to the strengthening yen and uncertainty about the global economic outlook. In July, core machinery orders (private sector, excluding volatile orders) dropped a seasonally adjusted 8.2% over the previous month, which contrasted the 7.7% expansion tallied in June and undershot market expectations that had orders declining 4.2%. The contraction was the result of a marked deterioration in both non-manufacturing and manufacturing orders. In addition, overseas demand for machinery, which determines future shipments, fell for the fifth consecutive month. Compared to the same month last year, core machinery orders rose 4.0%, which was below both the 17.9% expansion recorded in the previous month and the 8.3% increase expected by market analysts. Meanwhile, the Cabinet Office maintained its assessment that machinery orders are picking up as a trend and left its July-September forecast for core machinery orders unchanged at 0.9%.


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