JP: Machine Orders


Tue Dec 12 17:50:00 CST 2017

Consensus Actual Previous
M/M Change 3.0% 5.0% -8.1%
Y/Y Change 2.3% -3.5%

Highlights
Japan's private sector machinery orders (excluding volatile items) advanced 5.0 percent on the month (seasonally adjusted) in October, rebounding from a decline of 8.1 percent in September. This was stronger than the consensus forecast for an increase of 3.0 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) grew 2.3 percent on the year in October after a fall of 3.5 percent in September.

Orders improved on the month across both major sectors of the economy. Manufacturing orders increased by 5.1 percent on the month in October after a drop of 5.1 percent in September, while non-manufacturing orders (excluding volatile items) increased by 1.1 percent after a decline of 11.1 percent previously. Year-on-year growth in orders accelerated from 14.8 percent to 26.0 percent in the manufacturing sector, but fell by 13.9 percent for the non-manufacturing sector after dropping 3.3 percent in September.

Despite the improvement seen in October, officials expect orders to fall by 3.5 percent on the quarter and by 1.8 percent on the year in the three months to December, after these rose by 4.7 percent on the quarter and fell by 2.5 percent on the year in the three months to September. This suggests that investment spending will weigh on headline GDP growth for 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.