Japan's private sector machinery orders (excluding volatile items) rose 4.1 percent on the month (seasonally adjusted) in October after a fall of 3.3 percent September, stronger than the consensus forecast for an increase of 1.0 percent. This series, which excludes orders for ships and those from electric power companies, is considered a proxy for capital expenditures.
In seasonally adjusted terms, orders fell 1.5 percent year-on-year in October (down from 0.6 percent in September), while the original data showed a fall of 5.6 percent (down from 4.3 percent).
The month-on-month increase in October follows falls in orders in both August and September. Officials, however, continue to expect weakness in private sector orders for the rest of the year, retaining a forecast for a fall of 5.9 percent in the three months to December. Even when so-called volatile items are stripped out of orders, the series has been relatively volatile this year, oscillating between month-on-month increases and decreases with no sustained trend in year-on-year growth.
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.