JP: Machine Orders


Tue Mar 13 18:50:00 CDT 2018

Consensus Actual Previous Revised
M/M Change 6.6% 8.2% -11.9% -9.3%
Y/Y Change 2.9% -5.0%

Highlights
Japan's private sector machinery orders (excluding volatile items) increased 8.2 percent on the month (seasonally adjusted) in January, rebounding from a decline of 9.2 percent in December. 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 2.9 percent on the year in January, also rebounding from a fall of 5.0 percent in December.

The improvement in orders in January was seen in both the manufacturing and non-manufacturing sectors. Manufacturing orders rose 9.9 percent on the month in January after a decline of 8.5 percent in December, while non-manufacturing orders (excluding volatile items) increased 4.4 percent after falling 5.3 percent previously. Year-on-year growth in orders accelerated from 3.0 percent to 16.8 percent in the manufacturing sector and fell by 7.0 percent for the non-manufacturing sector after dropping by 10.9 percent in December.

Today's data also shows an upward revision to the quarterly growth in orders in the three months to December. Private sector machinery orders (excluding volatile items) are now estimated to have grown by 0.3 percent in the three months to December compared with the previous estimate of a fall of 0.1 percent. Officials, however, are now less optimistic about the near-term outlook, forecasting orders to fall by 1.5 percent on the quarter in the three months to March, down from the previous forecast of 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.