JP: Machine Orders


Wed Feb 14 17:50:00 CST 2018

Consensus Actual Previous
M/M Change -1.8% -11.9% 5.7%
Y/Y Change -5.0% 4.1%

Highlights
Japan's private sector machinery orders (excluding volatile items) fell 11.9 percent on the month (seasonally adjusted) in December, down sharply from an increase of 5.7 percent in November. 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) fell 5.0 percent on the year in December, down from an increase of 4.1 percent in November.

Growth in orders weakened in both the manufacturing and non-manufacturing sectors in December. Manufacturing orders fell by 13.3 percent on the month in December after a decline of 0.2 percent in November, while non-manufacturing orders (excluding volatile items) dropped 7.3, down from growth of 9.8 percent previously. Year-on-year growth in orders slowed from 14.2 percent to 3.0 percent in the manufacturing sector and fell by 10.9 percent for the non-manufacturing sector after dropping by 3.9 percent in November.

In quarterly terms, the weakness in December slightly outweighed more positive outcomes in October and November, with private sector machinery orders (excluding volatile items) falling by 0.1 percent on the quarter in the three months to December. This is broadly in line with GDP data published earlier in the week which showed slower growth in investment. Officials expect orders to rebound moderately in the three months to March, forecasting growth of 0.6 percent.

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.