| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -1.1% | -3.9% to 5.0% | 2.9% | 7.7% |
| Year over Year | 2.3% | -0.6% to 8.6% | 2.7% | -1.8% |
Highlights
Japanese core machinery orders, the key leading indicator of business investment in equipment, beat most expectations to post a second straight monthly rise, up 2.9 percent in March, following a much stronger-than-expected 7.7 percent gain to a 13-month high in February, prompting the government to upgrade its view for the first time in two years.
The latest figure was firmer than the median economist forecast of a 1.1 percent pullback (forecasts ranged widely from a 3.9 percent drop to a 5.0 percent rise). Orders from manufacturers surged 19.4 percent on the month, led by demand for engines and computers, after a 9.4 percent rise in February and a 13.2 percent plunge in January. Those from non-manufacturers posted the first drop in three months, slumping 11.3 percent after a 9.1 percent rise and a 6.5 percent gain, hit by lower orders for construction equipment and despite continued solid demand for computers.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked the first year-over-year rise in 13 months, up 2.7 percent, also above the consensus call of a 2.3 percent rise, following a smaller-than-expected 1.8 percent dip in the prior month.
Core orders rose a solid 4.4 percent on quarter in the January-March quarter after falling 1.3 percent in October-December but failed to match the official forecast of a 4.9 percent rebound provided in February. The Cabinet Office forecast that core orders are likely to slip back 1.6 percent in the April-June quarter for the first drop in two quarters, which are expected to be pulled down by both the manufacturing and non-manufacturing sectors.
The Cabinet Office upgraded its assessment for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"weakened" as it downgraded its view for the first time in more than a year in the January 2024 report.
Core orders rose to ¥913.0 billion on a seasonally adjusted basis in March after surging to ¥886.8 billion. Both amounts are the largest since ¥920.1 billion in January 2023. Companies have 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.
Econoday's Relative Performance Index (RPI) stands at minus 5, just below zero, which indicates the Japanese economy is performing largely as expected after underperforming with a wider margin recently. Excluding the impact of inflation, the RPI is at minus 5.
The latest figure was firmer than the median economist forecast of a 1.1 percent pullback (forecasts ranged widely from a 3.9 percent drop to a 5.0 percent rise). Orders from manufacturers surged 19.4 percent on the month, led by demand for engines and computers, after a 9.4 percent rise in February and a 13.2 percent plunge in January. Those from non-manufacturers posted the first drop in three months, slumping 11.3 percent after a 9.1 percent rise and a 6.5 percent gain, hit by lower orders for construction equipment and despite continued solid demand for computers.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked the first year-over-year rise in 13 months, up 2.7 percent, also above the consensus call of a 2.3 percent rise, following a smaller-than-expected 1.8 percent dip in the prior month.
Core orders rose a solid 4.4 percent on quarter in the January-March quarter after falling 1.3 percent in October-December but failed to match the official forecast of a 4.9 percent rebound provided in February. The Cabinet Office forecast that core orders are likely to slip back 1.6 percent in the April-June quarter for the first drop in two quarters, which are expected to be pulled down by both the manufacturing and non-manufacturing sectors.
The Cabinet Office upgraded its assessment for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"weakened" as it downgraded its view for the first time in more than a year in the January 2024 report.
Core orders rose to ¥913.0 billion on a seasonally adjusted basis in March after surging to ¥886.8 billion. Both amounts are the largest since ¥920.1 billion in January 2023. Companies have 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.
Econoday's Relative Performance Index (RPI) stands at minus 5, just below zero, which indicates the Japanese economy is performing largely as expected after underperforming with a wider margin recently. Excluding the impact of inflation, the RPI is at minus 5.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to fall 1.1 percent on the month in March after surging 7.7 percent to a 13-month high in February, led by solid demand for computers, and falling 1.7 percent in January. Core orders are expected to post their first rise in four quarters in January-March, somewhat recovering from the drag of suspended vehicle output over a safety scandal but miss the official projection of a 4.9 percent rebound.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark the first year-over-year rise in 13 months, up 2.3 percent, following a smaller-than-expected 1.8 percent dip in February. Last month, the Cabinet Office maintained its assessment after a recent downgrade, saying,"Machinery orders have weakened."
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark the first year-over-year rise in 13 months, up 2.3 percent, following a smaller-than-expected 1.8 percent dip in February. Last month, the Cabinet Office maintained its assessment after a recent downgrade, saying,"Machinery orders have weakened."
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.
