Japan's private sector machinery orders excluding volatile items fell 3.3 percent on the month (seasonally adjusted) in September after a fall of 2.2 percent in August, weaker than the consensus forecast for a fall of 0.8 percent. This series, which excludes orders for ships and those from electric power companies, is considered a proxy for capital expenditures.
In year-on-year terms, this measure of machinery orders increased by 0.6 percent in September, down from an increase of 10.2 percent in August
For the three months to September, machinery orders, excluding volatile orders, increased by 7.3 percent quarter-on-quarter, compared with a fall of 9.2 percent in the three months to June. Officials had forecast a quarterly increase of 5.2 percent in the three months to September, so the outcome was better than they had expected, notwithstanding the fall in the series in September. Officials, however, forecast a quarterly fall of 5.9 percent in the three months to December.
Today's data highlights that even when so-called volatile items are stripped out, private-sector orders have still been relatively volatile. This series typically oscillates between month-on-month increases and decreases and has done so consistently again this year, with no sustained trend in year-on-year growth. This has also been the case when the data is aggregated to a quarterly level.
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.
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.