JP: Machine Orders


Sun Jun 11 18:50:00 CDT 2017

Consensus Actual Previous
M/M Change 0.5% -3.1% 1.4%
Y/Y Change 2.7% -0.7%

Highlights
Japan's private sector machinery orders (excluding volatile items) fell 3.1 percent on the month (seasonally adjusted) in April after an increase of 1.4 percent in March. This was significantly weaker than the consensus forecast for an increase of 0.5 percent. This series, which excludes orders for ships and those from electric power companies, is considered a proxy for capital expenditures.

In original terms, machinery orders (excluding volatile items) advanced 2.7 percent on the year in April after a drop of 0.7 percent in March.

The big month-on-month fall in April was driven by the non-manufacturing sector, where orders (ex volatile items) dropped 5.0 percent. These orders also fell 2.1 percent on the year in April, down from an increase of 2.2 percent in March. Manufacturing orders, in contrast, rose by 2.5 percent on the month in April with year-on-year growth rebounding from a decline of 4.9 percent in March to an increase of 9.8 percent.

Officials expect private sector machinery orders (excluding volatile items) to fall by 5.9 percent on the quarter for the three months to June, weakening from a decline of 1.4 percent in the three months to March. They also forecast year-on-year growth in these orders to fall 6.8 percent on the year in the three months to June, down from a decline of 1.0 percent in the previous quarter. This suggests that GDP data will show weaker growth in investment spending in the current quarter.

Definition
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.



Description
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.