September core machine orders surprised on the upside -- they soared 7.5 percent on the month after sinking 5.7 percent in August. However, core is still negative from a year ago, down 0.5 percent. The monthly change is a popular proxy for capital expenditures. Expectations were for a monthly increase of 3.3 percent. Manufacturing orders dropped 5.5 percent while nonmanufacturing (excluding volatile orders) jumped 14.3 percent. Overseas orders were up 4.8 percent.
Data like this may go some of the way to validating the Bank of Japan's decision to keep its monetary policy unchanged at the end of October. Numbers like this are a potentially positive sign for business spending, which is typically a cause for optimism in coming months.
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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