| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.7% | -1.5% to 3.0% | 7.7% | -1.7% |
| Year over Year | -5.8% | -7.9% to -3.7% | -1.8% | -10.9% |
Highlights
Japanese core machinery orders jumped 7.7 percent on the month in February to a 13-month high of ¥886.8 billion on continued solid demand for computers, recovering from January's 1.7 percent slump that was partly caused by suspended vehicle output over a safety test scandal.
The latest figure was much stronger than the median economist forecast of a 0.7 percent rise and also the highest growth since 8.1 percent seen in January 2023. Orders from manufacturers rose 9.4 percent on the month after a 13.2 percent plunge in January and a 6.0 percent rise in December while those from non-manufacturers posted a second straight increase, up 9.1 percent after a 6.5 percent rise.
On the year, orders marked their 12th straight decline, down 1.8 percent (consensus was a deeper 5.8 percent drop), following a 10.9 percent slump in the prior month.
The Cabinet Office maintained its assessment after downgrading it for the first time in more than a year last month, saying,"Machinery orders have weakened recently." Previously, orders had been"stalling."
The Bank of Japan's March quarter Tankan survey showed solid capex plans for fiscal 2024 that began on April 1, backed by strong demand for automation amid labor shortages as well as government-led digitization and emission control.
The stronger-than-expected machinery orders boosted Econoday's Relative Performance Index (RPI) to plus 26, comfortably above zero, which indicates the Japanese economy is performing better than expected after being largely flat recently. Excluding the impact of inflation, the RPI is at plus 33.
The increase in orders was led by higher demand for computers from electric equipment makers, cranes and conveyors from information and communications equipment makers, communications equipment from telecom firms, and excavators, cranes and tractors from construction firm.
Core orders are predicted by the Cabinet Office to rise 4.9 percent on quarter in the January-March period for the first increase in four quarters, led by a sharp gain in orders from the manufacturing sector and a modest rise in those from non-manufacturers. After today's data, core orders would still have to rise 4.6 percent on the month in March to hit the forecast, which is uncertain. The forecast for the January-March quarter is based on the Cabinet Office survey concluded by Dec. 25, which means the effects of the powerful New Year's Day earthquake and suspension of all domestic production by Toyota Motor group firm Daihatsu over a vehicle safety scandal from late December until mid-February are not reflected in the outlook provided by firms.
The latest figure was much stronger than the median economist forecast of a 0.7 percent rise and also the highest growth since 8.1 percent seen in January 2023. Orders from manufacturers rose 9.4 percent on the month after a 13.2 percent plunge in January and a 6.0 percent rise in December while those from non-manufacturers posted a second straight increase, up 9.1 percent after a 6.5 percent rise.
On the year, orders marked their 12th straight decline, down 1.8 percent (consensus was a deeper 5.8 percent drop), following a 10.9 percent slump in the prior month.
The Cabinet Office maintained its assessment after downgrading it for the first time in more than a year last month, saying,"Machinery orders have weakened recently." Previously, orders had been"stalling."
The Bank of Japan's March quarter Tankan survey showed solid capex plans for fiscal 2024 that began on April 1, backed by strong demand for automation amid labor shortages as well as government-led digitization and emission control.
The stronger-than-expected machinery orders boosted Econoday's Relative Performance Index (RPI) to plus 26, comfortably above zero, which indicates the Japanese economy is performing better than expected after being largely flat recently. Excluding the impact of inflation, the RPI is at plus 33.
The increase in orders was led by higher demand for computers from electric equipment makers, cranes and conveyors from information and communications equipment makers, communications equipment from telecom firms, and excavators, cranes and tractors from construction firm.
Core orders are predicted by the Cabinet Office to rise 4.9 percent on quarter in the January-March period for the first increase in four quarters, led by a sharp gain in orders from the manufacturing sector and a modest rise in those from non-manufacturers. After today's data, core orders would still have to rise 4.6 percent on the month in March to hit the forecast, which is uncertain. The forecast for the January-March quarter is based on the Cabinet Office survey concluded by Dec. 25, which means the effects of the powerful New Year's Day earthquake and suspension of all domestic production by Toyota Motor group firm Daihatsu over a vehicle safety scandal from late December until mid-February are not reflected in the outlook provided by firms.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to post a slight 0.7 percent rebound on the month in February after falling 1.7 percent in January and rising 1.9 percent in December. The Bank of Japan's March quarter Tankan survey showed solid capex plans for fiscal 2024 that began on April 1, backed by strong demand for digitization and automation amid rising profits.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark a 12th straight year-over-year decrease, down 5.8 percent, following a 10.9 percent slump in January and a 0.7 percent dip in December. Last month, the Cabinet Office downgraded its assessment after holding it for more than a year, saying,"Machinery orders have weakened recently." Previously, orders had been"stalling."
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark a 12th straight year-over-year decrease, down 5.8 percent, following a 10.9 percent slump in January and a 0.7 percent dip in December. Last month, the Cabinet Office downgraded its assessment after holding it for more than a year, saying,"Machinery orders have weakened recently." Previously, orders had been"stalling."
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.
