December machine orders excluding volatile items disappointed. On the month they added only 1.3 percent against expectations of 4.6 percent. On the year, orders were down 9.2 percent. Core machinery orders are a proxy for private capital expenditures. Economists were hoping for better figures after a steep 6.3 percent fall a month before, which broke a four-month trend of gains. The Cabinet Office cut its future assessment and admitted that the recovery could be stalling.
Nonmanufacturing orders also excluding volatile orders edged up 0.5 percent while manufacturing orders dropped 7.0 percent on the month. Orders from overseas were down for a third month, this time by 6.0 percent. Total orders dropped 10.4 percent after sliding 2.9 percent in November.
The total value of new private-sector purchase orders placed with manufacturers for machines, excluding ships and utilities. It is a leading indicator of production. Rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.
It is a leading indicator of production. Rising purchase orders signal that manufacturers will increase activity as they work to fill the orders. The importance of machinery orders cannot be overstated given the economy's dependence on exports. The purpose of these data is to get a picture of machinery manufacturers' order books and to collect basic material for analyzing the direction of the economy through an early understanding of trends in capital investment in machinery.
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