| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -2.8% | -7.2% to 0.8% | -2.9% | 2.9% |
| Year over Year | 0.0% | -7.2% to 2.8% | 0.7% | 2.7% |
Highlights
Japanese core machinery orders, the key leading indicator of business investment in equipment, posted their first drop in three months in April with a 2.9 percent fall on a pullback in manufacturing, taking a breather after marking stronger-than-expected gains of 2.9 percent in March and 7.7 percent in February.
The latest figure was largely in line with the median economist forecast of a 2.8 percent decrease (forecasts ranged from a 7.2 percent drop to a 0.8 percent rise). Despite the drop in April, the three-month moving average of core orders rose 2.4 percent in the February-April period after rising 3.0 percent in January-March.
The Cabinet Office maintained its assessment after upgrading it last month for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"weakened."
Orders from manufacturers slumped 11.3 percent on the month, hit by declines in engines from shipyards and computers from electric equipment makers, after a 19.4 percent surge in March. Those from non-manufacturers rebounded 5.9 percent after posting the first drop in three months with a 11.3 percent slump in March, led by higher demand for computers from the financial industry and for buses and trucks from transporters. Orders for computers have been strong but mixed, with those from the wholesale/retail industry and leasing firms down in April.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked the second straight year-over-year increase, up 0.7 percent, after rising 2.7 percent in March for the first rise in 13 months. It was firmer than the consensus forecast of being unchanged.
Last month, the Cabinet Office forecast that core orders were likely to slip back 1.6 percent on quarter 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 in payback for recent gains.
Core orders fell to ¥886.3 billion on a seasonally adjusted basis in April after surging to ¥913.0 billion in March, which was 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 plus 3, just above zero, which indicates the Japanese economy is performing largely as expected. Excluding the impact of inflation, the RPI is at minus 9.
The latest figure was largely in line with the median economist forecast of a 2.8 percent decrease (forecasts ranged from a 7.2 percent drop to a 0.8 percent rise). Despite the drop in April, the three-month moving average of core orders rose 2.4 percent in the February-April period after rising 3.0 percent in January-March.
The Cabinet Office maintained its assessment after upgrading it last month for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"weakened."
Orders from manufacturers slumped 11.3 percent on the month, hit by declines in engines from shipyards and computers from electric equipment makers, after a 19.4 percent surge in March. Those from non-manufacturers rebounded 5.9 percent after posting the first drop in three months with a 11.3 percent slump in March, led by higher demand for computers from the financial industry and for buses and trucks from transporters. Orders for computers have been strong but mixed, with those from the wholesale/retail industry and leasing firms down in April.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked the second straight year-over-year increase, up 0.7 percent, after rising 2.7 percent in March for the first rise in 13 months. It was firmer than the consensus forecast of being unchanged.
Last month, the Cabinet Office forecast that core orders were likely to slip back 1.6 percent on quarter 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 in payback for recent gains.
Core orders fell to ¥886.3 billion on a seasonally adjusted basis in April after surging to ¥913.0 billion in March, which was 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 plus 3, just above zero, which indicates the Japanese economy is performing largely as expected. Excluding the impact of inflation, the RPI is at minus 9.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to post the first drop on the month in three months, down 2.8%, despite continued strong demand for computers and taking a breather after marking a solid 2.9% rise in March and surging 7.7 percent to a 13-month high in February. Core orders have largely recovered from the drag of suspended vehicle output over a safety scandal through early March.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to be flat on the year in April after marking the first increase in 13 months in March with a 2.3 percent gain. Last month, the Cabinet Office upgraded its view for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"weakened."
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to be flat on the year in April after marking the first increase in 13 months in March with a 2.3 percent gain. Last month, the Cabinet Office upgraded its view for the first time since its April 2022 report, saying,"Machinery orders are showing signs of a pickup." Previously, it said orders had"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.
