JP: Machine Orders


Tue Apr 10 18:50:00 CDT 2018

Consensus Actual Previous
M/M Change -2.5% 2.1% 8.2%
Y/Y Change 2.4% 2.9%

Highlights
Japan's private sector machinery orders (excluding volatile items) rose 2.1 percent on the month (seasonally adjusted) in February, down from an increase of 8.2 percent in January. 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 2.4 percent on the year in February, down from an increase of 2.9 percent in January.

Weaker month-on-month growth in headline orders in February was driven by both the manufacturing and non-manufacturing sectors. Manufacturing orders rose 8.0 percent in February after rising 9.9 percent on the month in January, while non-manufacturing orders (excluding volatile items) was flat after increasing 4.4 percent previously. Year-on-year growth in orders picked up from 16.8 percent to 21.4 percent in the manufacturing sector but fell by 10.4 percent for the non-manufacturing sector after dropping by 7.0 percent in January.

Officials continue to expect orders to weaken in the three months to March, suggesting that business investment will make only a limited contribution to headline GDP growth. Officials forecast orders to fall by 1.5 percent on the quarter in the three months to March, down from an increase of 0.3 percent in the three months to December.

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.