| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.5% | -4.0% to 3.4% | 0.7% | 1.4% |
| Year over Year | -5.7% | -9.8% to -1.0% | -2.2% | -2.2% |
Highlights
Japanese core machinery orders, the key leading indicator of business investment in equipment, unexpectedly posted a second straight monthly gain in October, up 0.7 percent, after rebounding an above-forecast 1.4 percent in September and falling 0.5 percent in August, as demand for computers is mixed among industries after recent gains, data released Thursday by the Cabinet Office showed.
Core orders marked their eighth straight decline from a year earlier, down by a smaller-than-expected 2.2 percent, following a 2.2 percent dip in September and a 7.7 percent slump in August.
Some firms are cautious about implementing their solid capital investment plans for fiscal 2023 ending next March but capex is generally 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 the December quarter showed large firms revised down their plans for investment in equipment for fiscal 2023 only slightly from the September survey while smaller firms continued raising their capex plans. The survey also showed stronger-than-expected business sentiment in both the manufacturing and non-manufacturing sectors.
Econoday's Relative Performance Index (RPI) stood at plus 13, above zero, which indicates the Japanese economy is performing better than expected. Excluding the impact of inflation, the RPI was at plus 30.
Core private-sector machinery orders which exclude volatile orders from electric utilities and for ships, rose 0.7 percent from the previous month on a seasonally adjusted basis to ¥858.7 billion in October after rising 1.4 percent to ¥852.9 billion in September. It was stronger than the median economist forecast of a 0.5 percent drop (forecasts ranged from a 4.0 percent drop to a 3.4 percent gain).
Orders from manufacturers edged up 0.2 percent on the month in October after falling 1.8 percent in September and rising 2.2 percent in August while those from non-manufacturers in the core measure rose 1.2 percent after jumping 5.7 percent the previous month and falling 3.8 percent in August.
The increase in core orders in October was led by higher demand for computers from the wholesaler/retailer category and real-estate firms as well as from metal producers. Higher orders were seen for boilers and turbines from"other manufacturers" and pumps and compressors from general and production machine makers. On the downside, orders for computers from leasing firms, the telecommunications firms and information service providers slipped after recent gains.
The Cabinet Office maintained its assessment after downgrading it in January 2023 for the November 2022 data, saying,"Machinery orders are pausing."
Last month, the Cabinet Office forecast that core orders would edge up 0.5 percent in the October-December quarter, led by a solid rebound in orders from the non-manufacturing sector, which is expected to offset a second straight quarterly drop in those from the manufacturing sector.
Core orders fell 2.2 percent from a year earlier in October for the eighth straight decline after falling 2.2 percent in September, 7.7 percent in August and plunging 13.0 percent in July, which was partly in reaction to a sharp 12.8 percent gain seen in July 2022. It was firmer than the median economist forecast of a 5.7 percent drop. Forecasts ranged from 9.8 percent to 1.0 percent falls.
Core orders marked their eighth straight decline from a year earlier, down by a smaller-than-expected 2.2 percent, following a 2.2 percent dip in September and a 7.7 percent slump in August.
Some firms are cautious about implementing their solid capital investment plans for fiscal 2023 ending next March but capex is generally 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 the December quarter showed large firms revised down their plans for investment in equipment for fiscal 2023 only slightly from the September survey while smaller firms continued raising their capex plans. The survey also showed stronger-than-expected business sentiment in both the manufacturing and non-manufacturing sectors.
Econoday's Relative Performance Index (RPI) stood at plus 13, above zero, which indicates the Japanese economy is performing better than expected. Excluding the impact of inflation, the RPI was at plus 30.
Core private-sector machinery orders which exclude volatile orders from electric utilities and for ships, rose 0.7 percent from the previous month on a seasonally adjusted basis to ¥858.7 billion in October after rising 1.4 percent to ¥852.9 billion in September. It was stronger than the median economist forecast of a 0.5 percent drop (forecasts ranged from a 4.0 percent drop to a 3.4 percent gain).
Orders from manufacturers edged up 0.2 percent on the month in October after falling 1.8 percent in September and rising 2.2 percent in August while those from non-manufacturers in the core measure rose 1.2 percent after jumping 5.7 percent the previous month and falling 3.8 percent in August.
The increase in core orders in October was led by higher demand for computers from the wholesaler/retailer category and real-estate firms as well as from metal producers. Higher orders were seen for boilers and turbines from"other manufacturers" and pumps and compressors from general and production machine makers. On the downside, orders for computers from leasing firms, the telecommunications firms and information service providers slipped after recent gains.
The Cabinet Office maintained its assessment after downgrading it in January 2023 for the November 2022 data, saying,"Machinery orders are pausing."
Last month, the Cabinet Office forecast that core orders would edge up 0.5 percent in the October-December quarter, led by a solid rebound in orders from the non-manufacturing sector, which is expected to offset a second straight quarterly drop in those from the manufacturing sector.
Core orders fell 2.2 percent from a year earlier in October for the eighth straight decline after falling 2.2 percent in September, 7.7 percent in August and plunging 13.0 percent in July, which was partly in reaction to a sharp 12.8 percent gain seen in July 2022. It was firmer than the median economist forecast of a 5.7 percent drop. Forecasts ranged from 9.8 percent to 1.0 percent falls.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to dip 0.5 percent on the month in October after rebounding 1.4 percent in September and falling 0.5 percent in August (a few economists expect a second straight rise). Solid demand for computers from service providers may take a breather after recent gains.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, are expected to slump 5.7 percent on year for an 8th straight drop after falling 2.2 percent in September. Some firms are cautious about implanting their capital investment plans amid slowing global growth.
Last month, the Cabinet Office maintained its assessment, saying,"Machinery orders are pausing." It forecast core orders would rise a modest 0.5 percent on quarter in October-December after falling 1.8 percent in April-June.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, are expected to slump 5.7 percent on year for an 8th straight drop after falling 2.2 percent in September. Some firms are cautious about implanting their capital investment plans amid slowing global growth.
Last month, the Cabinet Office maintained its assessment, saying,"Machinery orders are pausing." It forecast core orders would rise a modest 0.5 percent on quarter in October-December after falling 1.8 percent in April-June.
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.
