Machine orders excluding volatile items such as ships and those from electric power companies fell 2.2 percent on the month in August after an increase of 4.9 percent in July. This series is considered a proxy for capital expenditures. The outcome in August was better than the consensus forecast for a fall of 5.5 percent but continues a pattern of volatility in the series, which has risen and fallen four times on a monthly basis since the start of the year.
On the year, machine orders rose 11.6 percent in August after an increase of 5.2 percent in July (revised from 9.4 percent), better than the consensus forecast of 6.5 percent. Officials have retained their forecast for this core measure of orders to increase by 5.2 percent in the three months to September, compared with a fall of 9.2 percent in the previous quarter.
Machine Orders are the total value of new private-sector purchase orders placed with manufacturers for machines excluding volatile items such as ships and utilities. It is a leading indicator of production. Analysts consider the data an indicator of capital spending. 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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