| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 1.0% | -3.0% to 4.8% | -3.9% | -4.5% |
| Year over Year | 1.4% | -2.0% to 6.0% | -3.5% | 9.8% |
Highlights
Japanese machinery orders, the key leading indicator of business investment in equipment, came in much weaker than expected in March, posting drops on the month and year, but managed to record a modest rise in the first quarter and are set to maintain a quarterly gain in April-June, reflecting solid investment plans for fiscal 2023, data released Monday by the Cabinet Office showed.
Capital investment is generally supported by demand for automation amid labor shortages in some sectors as well as government-led digital transformation and emission control.
The Bank of Japan's quarterly Tankan business survey for March showed large firms have solid plans for investment in equipment for fiscal 2023 starting on April 1 while smaller firms projected a rise at the initial stage, which is unusually bullish. Some plans may be carried over from fiscal 2022.
The Econoday Consensus Divergence Index stood at plus 8, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 13
Japanese policymakers have said the economy needs continued monetary easing and fiscal spending to support a full recovery from the pandemic-caused slump and guide inflation to stable 2 percent with sustainable wage growth.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, fell 3.9 percent from the previous month on a seasonally adjusted basis to ¥852.9 billion in March for the second straight drop after slipping 4.5 percent to ¥888.0 billion in February and surging 9.5 percent to ¥929.6 billion in January. It was much weaker than the median economist forecast of a 1.0 percent rise (forecasts ranged from a 3.0 percent fall to a 4.8 percent gain). The amount in January was the largest since ¥948.8 billion in July 2022.
Core orders rebounded 2.6 percent on quarter in the January-March quarter, coming in slightly below the official forecast for a 2.9 percent rebound. It followed decreases of 4.7 percent in October-December and 1.6 percent in July-September and a 6.7 percent rise in April-June.
The Cabinet Office projected that core orders would rise a further 4.6 percent in the April-June quarter, led by a sharp rise in orders from the non-manufacturing sector, as consumer spending on services is expected to remain solid.
Orders from manufacturers dipped 2.4 percent on the month in March after rising 10.2 percent in February and falling 2.6 percent in January while those from non-manufacturers in the core measure fell 4.5 percent after slumping 14.7 percent in February and rebounding 19.5 percent in January.
The Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing." The three-month moving average edged up 0.2 percent in the January-March period after rising 1.6 percent in December-February after 0.9 percent in November-January.
Core orders unexpectedly fell 3.5 percent from a year earlier in March for the first drop in three months after surging 9.8 percent in February, rising 4.5 percent in January and falling 6.6 percent in December. It was much weaker than the median economist forecast of a 1.4 percent gain (forecasts ranged from a 2.0 percent drop to a 6.0 percent rise).
Capital investment is generally supported by demand for automation amid labor shortages in some sectors as well as government-led digital transformation and emission control.
The Bank of Japan's quarterly Tankan business survey for March showed large firms have solid plans for investment in equipment for fiscal 2023 starting on April 1 while smaller firms projected a rise at the initial stage, which is unusually bullish. Some plans may be carried over from fiscal 2022.
The Econoday Consensus Divergence Index stood at plus 8, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 13
Japanese policymakers have said the economy needs continued monetary easing and fiscal spending to support a full recovery from the pandemic-caused slump and guide inflation to stable 2 percent with sustainable wage growth.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, fell 3.9 percent from the previous month on a seasonally adjusted basis to ¥852.9 billion in March for the second straight drop after slipping 4.5 percent to ¥888.0 billion in February and surging 9.5 percent to ¥929.6 billion in January. It was much weaker than the median economist forecast of a 1.0 percent rise (forecasts ranged from a 3.0 percent fall to a 4.8 percent gain). The amount in January was the largest since ¥948.8 billion in July 2022.
Core orders rebounded 2.6 percent on quarter in the January-March quarter, coming in slightly below the official forecast for a 2.9 percent rebound. It followed decreases of 4.7 percent in October-December and 1.6 percent in July-September and a 6.7 percent rise in April-June.
The Cabinet Office projected that core orders would rise a further 4.6 percent in the April-June quarter, led by a sharp rise in orders from the non-manufacturing sector, as consumer spending on services is expected to remain solid.
Orders from manufacturers dipped 2.4 percent on the month in March after rising 10.2 percent in February and falling 2.6 percent in January while those from non-manufacturers in the core measure fell 4.5 percent after slumping 14.7 percent in February and rebounding 19.5 percent in January.
The Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing." The three-month moving average edged up 0.2 percent in the January-March period after rising 1.6 percent in December-February after 0.9 percent in November-January.
Core orders unexpectedly fell 3.5 percent from a year earlier in March for the first drop in three months after surging 9.8 percent in February, rising 4.5 percent in January and falling 6.6 percent in December. It was much weaker than the median economist forecast of a 1.4 percent gain (forecasts ranged from a 2.0 percent drop to a 6.0 percent rise).
Market Consensus Before Announcement
Japanese machinery orders, the key leading indicator of business investment in equipment, are expected to show a modest 1.0 percent rebound on the month in March amid solid business investment plans for fiscal 2023, after slipping 4.5 percent in February and surging 9.5 percent in January. Core private-sector orders are forecast to post a third consecutive rise on the year, up 1.4 percent, after a 9.8 percent jump in February. Capital investment is generally supported by demand for automation amid labor shortages in some sectors as well as government-led digital transformation and emission control.
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.
