| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.9% | -1.0% to 5.2% | 2.1% | -3.2% |
| Year over Year | 3.6% | -1.0% to 5.2% | -1.7% | 10.8% |
Highlights
Japanese core machinery orders posted their first increase in three months in June, up 2.1 percent on the month after falling 3.2 percent in May and 2.9 percent in April, backed by the need to digitize and automate operations amid widespread labor shortages.
The indicator, which tends to fluctuate sharply from month to month, came in much stronger than the median economist forecast of a 0.9 percent increase (forecasts ranged from a 1.0 percent drop to a 5.2 percent rise). Orders were led by engines from shipyards and computers from business machine makers, wholesalers/retailers and telecommunications firms.
Core orders fell just 0.1 percent on quarter in the April-June quarter, well above the official projection of a 1.6 percent decrease provided in May and following a 4.4 percent jump in January-March. It was largely in line with the median economist forecast of a 0.2 percent rise (forecasts ranged from a 1.2 percent dip to a 0.9 percent gain).
The Cabinet Office projects core orders will rise 0.2 percent in the July-September period. It maintained its assessment that"the pickup in machinery orders is pausing." The three-month moving average of core orders fell 1.4 percent in the April-June period after falling 1.1 percent in March-May and rising 2.4 percent in February-April.
Some firms remain cautious amid slowing global demand and elevated costs but companies in general have solid plans for investing in automation amid labor shortages and in digitization and emission control, which was confirmed in the Bank of Japan's latest quarterly Tankan survey for June.
Orders from manufacturers dipped 0.3 percent on the month in June after rising 1.0 percent in May, while orders from non-manufacturers rebounded 2.4 percent after falling 7.5 percent in May.
Orders showed their first year-over-year drop in four months, down 1.7 percent after increasing 10.8 percent in May. It was much weaker than the consensus forecast of a 7.1 percent increase.
Econoday's Relative Performance Index (RPI) stands at plus 31, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin. Excluding the impact of inflation, the RPI is at plus 37.
The indicator, which tends to fluctuate sharply from month to month, came in much stronger than the median economist forecast of a 0.9 percent increase (forecasts ranged from a 1.0 percent drop to a 5.2 percent rise). Orders were led by engines from shipyards and computers from business machine makers, wholesalers/retailers and telecommunications firms.
Core orders fell just 0.1 percent on quarter in the April-June quarter, well above the official projection of a 1.6 percent decrease provided in May and following a 4.4 percent jump in January-March. It was largely in line with the median economist forecast of a 0.2 percent rise (forecasts ranged from a 1.2 percent dip to a 0.9 percent gain).
The Cabinet Office projects core orders will rise 0.2 percent in the July-September period. It maintained its assessment that"the pickup in machinery orders is pausing." The three-month moving average of core orders fell 1.4 percent in the April-June period after falling 1.1 percent in March-May and rising 2.4 percent in February-April.
Some firms remain cautious amid slowing global demand and elevated costs but companies in general have solid plans for investing in automation amid labor shortages and in digitization and emission control, which was confirmed in the Bank of Japan's latest quarterly Tankan survey for June.
Orders from manufacturers dipped 0.3 percent on the month in June after rising 1.0 percent in May, while orders from non-manufacturers rebounded 2.4 percent after falling 7.5 percent in May.
Orders showed their first year-over-year drop in four months, down 1.7 percent after increasing 10.8 percent in May. It was much weaker than the consensus forecast of a 7.1 percent increase.
Econoday's Relative Performance Index (RPI) stands at plus 31, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a narrower margin. Excluding the impact of inflation, the RPI is at plus 37.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to have risen 0.9 percent on the month in June for their first increase in three months after falling 3.2 percent in May and 2.9 percent in April, backed by the need to digitize and automate operations amid widespread labor shortages. In the April-June quarter, core orders are expected to edge up 0.2 percent on quarter, which would be firmer than the official projection of a 1.6 percent decrease provided in May, following a 4.4 percent jump in January-March.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to rise 3.6 percent on the year in June for a fourth straight increase after a 10.8 percent surge in May. Last month, the Cabinet Office downgraded its assessment for the first time in four months and only two months after upgrading it, saying,"The pickup in machinery orders is pausing." Previously, it said,"Machinery orders are showing signs of a pickup."
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to rise 3.6 percent on the year in June for a fourth straight increase after a 10.8 percent surge in May. Last month, the Cabinet Office downgraded its assessment for the first time in four months and only two months after upgrading it, saying,"The pickup in machinery orders is pausing." Previously, it said,"Machinery orders are showing signs of a pickup."
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.
