| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -1.6% | -2.5% to 0.5% | 13.0% | 4.3% |
| Year over Year | -2.0% | -5.5% to -0.9% | 8.4% | 1.5% |
Highlights
Japanese core machinery orders, the key leading indicator of business investment in equipment, unexpectedly soared 13.0% on the month to a more than 17-year high of ¥1.01 trillion (¥1,010 billion) in March, easily beating the consensus forecast of a 1.6% drop and following a solid 4.3% rebound in February on a 3.5% dip in January. It was the highest amount since ¥1.07 trillion (¥1,074 billion) recorded in January 2008.
The unusual double-digit spike in the core reading was backed by lingering and widespread demand for computers, coming from electric machine makers as well as from the auto, financial and telecom industries. It was also pushed up by orders for X-ray equipment from general machinery producers. The increase was driven by +8.0% in orders from manufacturers (the second straight rise) and +9.6% from the non-manufacturing sector (the first gain in three months).
The latest machinery orders data, which tends to fluctuate widely from month to month, confirms the conviction among Japanese policymakers and economists alike that plans to digitize and automate operations remain strong. However, labor shortages, elevated costs and uncertainties over growth and inflation could undermine smooth implementation of those plans until the global economic outlook that has been clouded by the ongoing trade war initiated by the Trump administration becomes clearer.
In the January-March quarter, the core measure also posted an unexpected increase, up a solid 3.9% on quarter after rebounding 2.3% in October-December and slipping 0.7% in July-September, and led by widespread demand for computers, from electric machine and chemical makers as well as from the wholesale/retail and financial sectors.
The Q1 figure came in much stronger than the median economist forecast of a 0.9% dip and the official projection of a 2.2% slump. The Cabinet Office projected that core orders would slip back 2.1% in the second quarter.
The Cabinet Office maintained its assessment after upgrading it for the first time in eight months for the November data, saying, Machinery orders are showing signs of a pickup.
From a year earlier, core orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked their sixth consecutive gain, up a sharp 8.4% (vs. consensus -2.0%), following +1.5% the previous month.
The unusual double-digit spike in the core reading was backed by lingering and widespread demand for computers, coming from electric machine makers as well as from the auto, financial and telecom industries. It was also pushed up by orders for X-ray equipment from general machinery producers. The increase was driven by +8.0% in orders from manufacturers (the second straight rise) and +9.6% from the non-manufacturing sector (the first gain in three months).
The latest machinery orders data, which tends to fluctuate widely from month to month, confirms the conviction among Japanese policymakers and economists alike that plans to digitize and automate operations remain strong. However, labor shortages, elevated costs and uncertainties over growth and inflation could undermine smooth implementation of those plans until the global economic outlook that has been clouded by the ongoing trade war initiated by the Trump administration becomes clearer.
In the January-March quarter, the core measure also posted an unexpected increase, up a solid 3.9% on quarter after rebounding 2.3% in October-December and slipping 0.7% in July-September, and led by widespread demand for computers, from electric machine and chemical makers as well as from the wholesale/retail and financial sectors.
The Q1 figure came in much stronger than the median economist forecast of a 0.9% dip and the official projection of a 2.2% slump. The Cabinet Office projected that core orders would slip back 2.1% in the second quarter.
The Cabinet Office maintained its assessment after upgrading it for the first time in eight months for the November data, saying, Machinery orders are showing signs of a pickup.
From a year earlier, core orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked their sixth consecutive gain, up a sharp 8.4% (vs. consensus -2.0%), following +1.5% the previous month.
Market Consensus Before Announcement
Japanese core machinery orders, the key leading indicator of business investment in equipment, are forecast to slip back 1.6% in March (range: -2.5% to +0.5%) after rebounding 4.3% in February on a 3.5% dip in January. Plans to digitize and automate operations remain solid but labor shortages, elevated costs and global growth and inflation uncertainties amid a trade war initiated by the Trump administration are clouding the prospects for smooth implementation of those plans.
In the January-March quarter, the core measure is forecast by economists to fall 0.9% on quarter after rebounding 2.3% in October-December and slipping 0.7% in July-September, which would be firmer than the official projection of a 2.2% drop. The focus is on the official forecast for the April-June period when the Trump tariffs are expected to have a larger impact.
From a year earlier, core orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark their first drop in six months, down 2.0% (range: -5.5% to -0.9%), following +1.5% the previous month.
In the January-March quarter, the core measure is forecast by economists to fall 0.9% on quarter after rebounding 2.3% in October-December and slipping 0.7% in July-September, which would be firmer than the official projection of a 2.2% drop. The focus is on the official forecast for the April-June period when the Trump tariffs are expected to have a larger impact.
From a year earlier, core orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark their first drop in six months, down 2.0% (range: -5.5% to -0.9%), following +1.5% the previous month.
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.
