JP: Machine Orders


Tue Jan 16 17:50:00 CST 2018

Consensus Actual Previous
M/M Change -1.2% 5.7% 5.0%
Y/Y Change 4.1% 2.3%

Highlights
Japan's private sector machinery orders (excluding volatile items) advanced 5.7 percent on the month (seasonally adjusted) in November, picking up from an increase of 5.0 percent in October. This was stronger than the consensus forecast for a decline of 2.1 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 4.1 percent on the year in November, up from an increase of 2.3 percent in October.

Growth in orders strengthened in the non-manufacturing sector in November, but weakened in the manufacturing sector. Manufacturing orders fell by 0.2 percent on the month in November after an increase of 7.4 percent in October, while non-manufacturing orders (excluding volatile items) increased by 9.8 percent, accelerating from growth of 1.1 percent previously. Year-on-year growth in orders slowed from 26.0 percent to 14.2 percent in the manufacturing sector and fell by 3.9 percent for the non-manufacturing sector after dropping by 13.9 percent in October.

As they did last month, officials forecast 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 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.