Japan Investment


Japan: Machinery orders rebound in January

March 11, 2012

Machinery orders, a leading indicator of capital spending over a three to six month period, improved in January, thereby signalling that the world's third largest economy is recovering on the back of reconstruction spending and a better outlook for external demand. In January, core machinery orders (private sector, excluding volatile orders) expanded a seasonally adjusted 3.4% over the previous month, which contrasted the sharp 7.1% contraction recorded in December. Moreover, the print overshot market expectations, which had orders gaining a milder 2.3%. The acceleration was the result of a strong rebound in non-manufacturing orders, although manufacturing orders also improved. Moreover, overseas demand for machinery, which determines future exports, expanded a buoyant 20.1% in January, after growing a softer 5.6% in December. Compared to the same month last year, core machinery orders grew 5.7% in January, which was below the 6.3% rise seen in the previous month but overshot the 4.4% increase expected by market analysts. Meanwhile, the trend was stable in January, with the annual average growth in machinery orders remaining unchanged at December's 7.8%. The Cabinet Office expects that machinery orders will expand 2.3% in the first quarter this year, after they posted a smaller-than-expected 2.6% drop in the last quarter of 2011.


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