JP: Machine Orders

Sun Jun 10 18:50:00 CDT 2018

Consensus Actual Previous
M/M Change 2.5% 10.1% -3.9%
Y/Y Change 9.6% -2.4%

Japan's private sector machinery orders (excluding volatile items) rose 10.1 percent on the month (seasonally adjusted) in April, well above the consensus forecast for an increase of 2.5 percent and rebounding strongly from a drop of 3.9 percent in March. 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 9.6 percent on the year April after falling 2.4 percent in March.

The increase in month-on-month growth in headline orders in April was driven by the manufacturing sector. Manufacturing orders grew 22.7 percent in April after falling 17.5 percent in March, while non-manufacturing orders (excluding volatile items) rose 0.4 percent after increasing 2.2 percent previously. Year-on-year growth in orders accelerated from 1.5 percent to 23.5 percent in the manufacturing sector and fell by 1.1 percent for the non-manufacturing sector after dropping by 4.9 percent previously.

After the strong start to the quarter in April, officials continue to expect solid growth in orders in the near-term. Orders are forecast to increase by 7.1 percent on the quarter in the three months to June, up from 3.3 percent in the three months to March.

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.