JP: Machine Orders


Sun Jul 09 18:50:00 CDT 2017

Consensus Actual Previous
M/M Change 2.2% -3.6% -3.1%
Y/Y Change 0.6% 2.7%

Highlights
May private sector machine orders excluding volatile items dropped 3.6 percent on the month after sinking 3.1 percent in April for a second consecutive decline. The data indicated that business investment still lacks momentum. Analysts were far off with their expectations of an increase of 2.2 percent. The Japanese government downgraded its view -- machine orders were marking time. From a year ago, the unadjusted increase was 0.6 percent or a seasonally adjusted increase of 2.0 percent.

Manufacturing orders were up a monthly 1.0 percent and an unadjusted 6.3 percent on the year. Non-manufacturing orders excluding volatile items were down 5.1 percent after declining a monthly 5.0 percent last time. On the year, these unadjusted orders sank 4.0 percent after sliding 2.1 percent in April.

Orders from overseas dropped a monthly 5.2 percent but were up an impressive 25.3 percent on the year.

Machine orders are looked upon as a proxy for capital spending. These data combined with April's paint a weak picture for the second 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.