| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 3.0% | 1.4% to 4.8% | 5.5% | -3.9% |
| Year over Year | -7.0% | -8.7% to 6.3% | -5.9% | -3.5% |
Highlights
Japanese machinery orders, the key leading indicator of business investment in equipment, rebounded in April after two months of decline, led by solid demand from the non-manufacturing sector as Japan is playing catchup in easing Covid restrictions and reopening the economy, data released Thursday by the Cabinet Office showed.
For fiscal 2023 that began in April, 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 Econoday Consensus Divergence Index stood at minus 14, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 8.
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. Real wages have been falling in the face of elevated costs for daily necessities.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, rose 5.5 percent from the previous month on a seasonally adjusted basis to ¥900.0 billion in April for the first rise in three months after posting an unexpected 3.9 percent fall to ¥852.9 billion in March, slipping 4.5 percent to ¥888.0 billion in February and surging 9.5 percent to ¥929.6 billion in January. It was firmer than the median economist forecast of a 3.0 percent rise (forecasts ranged from 1.4 percent to 4.8 percent gains). The amount in January was the largest since ¥948.8 billion in July 2022.
Last month, the Cabinet Office projected that core orders would rise a further 4.6 percent in the April-June quarter after a 2.6 percent rise in January-March, led by a sharp rise in orders from the non-manufacturing sector, as consumer spending on services is expected to remain solid without strict Covid public health rules.
Orders from manufacturers fell 3.0 percent on the month in April after falling 2.4 percent in March and rising 10.2 percent in February while those from non-manufacturers in the core measure jumped 11.0 percent after dropping 4.5 percent in March and slumping 14.7 percent in February.
The Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing." The three-month moving average dipped 1.1 percent in the February-April period after increases of 0.2 percent in January-March and 1.6 percent in December-February.
Core orders fell 5.9 percent from a year earlier in April after unexpectedly dipping 3.5 percent in March and surging 9.8 percent in February. It was above the median economist forecast of a 7.0 percent fall (forecasts ranged from an 8.7 percent drop to a 6.3 percent rise).
For fiscal 2023 that began in April, 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 Econoday Consensus Divergence Index stood at minus 14, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 8.
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. Real wages have been falling in the face of elevated costs for daily necessities.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, rose 5.5 percent from the previous month on a seasonally adjusted basis to ¥900.0 billion in April for the first rise in three months after posting an unexpected 3.9 percent fall to ¥852.9 billion in March, slipping 4.5 percent to ¥888.0 billion in February and surging 9.5 percent to ¥929.6 billion in January. It was firmer than the median economist forecast of a 3.0 percent rise (forecasts ranged from 1.4 percent to 4.8 percent gains). The amount in January was the largest since ¥948.8 billion in July 2022.
Last month, the Cabinet Office projected that core orders would rise a further 4.6 percent in the April-June quarter after a 2.6 percent rise in January-March, led by a sharp rise in orders from the non-manufacturing sector, as consumer spending on services is expected to remain solid without strict Covid public health rules.
Orders from manufacturers fell 3.0 percent on the month in April after falling 2.4 percent in March and rising 10.2 percent in February while those from non-manufacturers in the core measure jumped 11.0 percent after dropping 4.5 percent in March and slumping 14.7 percent in February.
The Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing." The three-month moving average dipped 1.1 percent in the February-April period after increases of 0.2 percent in January-March and 1.6 percent in December-February.
Core orders fell 5.9 percent from a year earlier in April after unexpectedly dipping 3.5 percent in March and surging 9.8 percent in February. It was above the median economist forecast of a 7.0 percent fall (forecasts ranged from an 8.7 percent drop to a 6.3 percent rise).
Market Consensus Before Announcement
Japanese machinery orders, the key leading indicator of business investment in equipment, is forecast to have rebounded with a 3.0 percent rise in April after two months of decline, led by solid demand from the non-manufacturing sector, as Japan is playing catchup in easing Covid restrictions and reopening the economy. Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, are expected to fall 7.0 percent in April after unexpectedly dipping 3.5% in March and surging 9.8% in February.
Last month, the Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing."
Last month, the Cabinet Office maintained its assessment after downgrading it in January for November data, saying,"Machinery orders are pausing."
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.
