| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.1% | -2.4% to 1.5% | -0.5% | -1.1% |
| Year over Year | -6.1% | -10.5% to -4.3% | -7.7% | -13.0% |
Highlights
Japanese core machinery orders, the key leading indicator of business investment in equipment, came in weaker than expected with a slight but second straight drop on the month in August as demand for computers and communications equipment slipped back among some industries, offsetting continued solid orders for those digitization items from others, data released Thursday by the Cabinet Office showed.
Core orders marked their sixth straight decline from a year earlier, with the pace of decline decelerating from July.
Capital investment is supported by demand for automation amid labor shortages as well as government-led digitization and emission control. The Bank of Japan's quarterly Tankan business survey for September showed large corporations revised up their plans for investment in equipment slightly for fiscal 2023 that began in April, as largely expected, and smaller firms raised their capex plans much more sharply than forecast.
Econoday's Relative Performance Index (RPI) stood at plus 11, slightly above zero, which indicates the Japanese economy is performing moderately better than expected after outperforming with a wider margin recently. Excluding the impact of inflation, the RPI was at plus 36.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, fell 0.5 percent from the previous month on a seasonally adjusted basis to ¥840.7 billion in August after falling 1.1 percent to ¥844.9 billion in July, rising 2.7 percent to ¥854.0 billion in June and plunging 7.6 percent to ¥831.5 billion in May, which was the lowest amount since ¥825.2 billion in February 2022. The decrease in August was weaker than the median economist forecast of a 0.1 percent rise (forecasts ranged from a 2.4 percent drop to a 1.5 percent gain).
The Cabinet Office has projected that core orders would dip a further 2.6 percent in the July-September quarter, led by declines in orders from both the manufacturing and non-manufacturing sectors, after falling 3.2 percent in the previous quarter.
Orders from manufacturers rose 2.2 percent on the month in August after falling 5.3 percent in July and rising 1.6 percent in June, while those from non-manufacturers in the core measure fell 3.8 percent for the first drop in three months after rising 1.3 percent the previous month.
The decrease in core orders in August was led by slower demand for computers and communications equipment from the financial and insurance industries as well as lower orders for nuclear power facilities and computers from non-ferrous metal producers and aircraft from"other non-manufacturers." On the upside, higher orders came from chemical producers for computers, the auto industry for metal working machinery and leasing firms for computers and construction machinery.
The Cabinet Office maintained its assessment after downgrading it in January for the November data, saying,"Machinery orders are pausing." The three-month moving average rose 0.4 percent in the June-August period after sliding 2.1 percent in May-July, being unchanged in April-June and falling 2.1 percent in March-May.
Core orders fell 7.7 percent from a year earlier in August after plunging 13.0 percent in July partly, which was in reaction to a sharp 12.8 percent gain seen in July 2022. It followed decreases of 5.8 percent in June, 8.7 percent in May, 5.9 percent in April and 3.5 percent in March and a 9.8 percent jump in February. It was weaker than the median economist forecast of a 6.1 percent drop. Forecasts ranged from 10.5 percent to 4.3 percent falls.
Core orders marked their sixth straight decline from a year earlier, with the pace of decline decelerating from July.
Capital investment is supported by demand for automation amid labor shortages as well as government-led digitization and emission control. The Bank of Japan's quarterly Tankan business survey for September showed large corporations revised up their plans for investment in equipment slightly for fiscal 2023 that began in April, as largely expected, and smaller firms raised their capex plans much more sharply than forecast.
Econoday's Relative Performance Index (RPI) stood at plus 11, slightly above zero, which indicates the Japanese economy is performing moderately better than expected after outperforming with a wider margin recently. Excluding the impact of inflation, the RPI was at plus 36.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, fell 0.5 percent from the previous month on a seasonally adjusted basis to ¥840.7 billion in August after falling 1.1 percent to ¥844.9 billion in July, rising 2.7 percent to ¥854.0 billion in June and plunging 7.6 percent to ¥831.5 billion in May, which was the lowest amount since ¥825.2 billion in February 2022. The decrease in August was weaker than the median economist forecast of a 0.1 percent rise (forecasts ranged from a 2.4 percent drop to a 1.5 percent gain).
The Cabinet Office has projected that core orders would dip a further 2.6 percent in the July-September quarter, led by declines in orders from both the manufacturing and non-manufacturing sectors, after falling 3.2 percent in the previous quarter.
Orders from manufacturers rose 2.2 percent on the month in August after falling 5.3 percent in July and rising 1.6 percent in June, while those from non-manufacturers in the core measure fell 3.8 percent for the first drop in three months after rising 1.3 percent the previous month.
The decrease in core orders in August was led by slower demand for computers and communications equipment from the financial and insurance industries as well as lower orders for nuclear power facilities and computers from non-ferrous metal producers and aircraft from"other non-manufacturers." On the upside, higher orders came from chemical producers for computers, the auto industry for metal working machinery and leasing firms for computers and construction machinery.
The Cabinet Office maintained its assessment after downgrading it in January for the November data, saying,"Machinery orders are pausing." The three-month moving average rose 0.4 percent in the June-August period after sliding 2.1 percent in May-July, being unchanged in April-June and falling 2.1 percent in March-May.
Core orders fell 7.7 percent from a year earlier in August after plunging 13.0 percent in July partly, which was in reaction to a sharp 12.8 percent gain seen in July 2022. It followed decreases of 5.8 percent in June, 8.7 percent in May, 5.9 percent in April and 3.5 percent in March and a 9.8 percent jump in February. It was weaker than the median economist forecast of a 6.1 percent drop. Forecasts ranged from 10.5 percent to 4.3 percent falls.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to be nearly flat, up just 0.1percent on the month in August, after slipping 1.1 percent in July and rebounding 2.7 percent in June. Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, are expected to fall 6.1 percent on the year for a sixth straight drop after slumping 13.0 percent in July. Last month, the Cabinet Office maintained its assessment, saying,"Machinery orders are pausing."
Capital investment is supported by demand for automation amid labor shortages as well as government-led digitization and emission control. The Bank of Japan's quarterly Tankan business survey for September showed large corporations revised up their plans for investment slightly for fiscal 2023 that began in April, as largely expected, and smaller firms raised their capex plans much more sharply than forecast.
Capital investment is supported by demand for automation amid labor shortages as well as government-led digitization and emission control. The Bank of Japan's quarterly Tankan business survey for September showed large corporations revised up their plans for investment slightly for fiscal 2023 that began in April, as largely expected, and smaller firms raised their capex plans much more sharply than forecast.
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.
