| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 3.2% | 1.0% to 5.0% | 19.1% | -11.0% |
| Year over Year | 1.0% | -0.5% to 4.4% | 16.8% | -6.4% |
Highlights
Japan's core machinery orders, a key leading indicator of business investment in equipment and software, surged a record 19.1% on the month to the highest level in nearly 18 years, backed by large orders for chemical devices from refineries and for nuclear power facilities from the non-ferrous metal industry (nuclear fuel producers) as well as persistent services sector demand for computers in an automation and digitization drive aimed at alleviating labor shortages.
The rebound at the end of the year more than made up for a sharper-than-expected 11.0% pullback in November after a 7.0% jump in October. The core measure's December value of ¥1.05 trillion was the largest since Y1.07 trillion hit in January 2008.
In the October-December quarter, the core measure marked a sharp 7.9% rebound on quarter to ¥2.93 trillion, the biggest amount since ¥3.05 trillion recorded in April-June 2006. It followed a 2.1% dip in July-September and a slight 0.4% gain in April-June. The Q4 figure was much stronger than the official projection of a slight 0.2% increase. The official forecast for the January-March quarter is a 4.5% pullback from the previous three-month period.
The Cabinet Office maintained its assessment that machinery orders are showing signs of a pickup, after having upgraded its view for the first time in 11 months in the October report.
Details:
Japan Dec core machine orders +19.1% m/m (Nov -11.0%), 1st rise in two months; median forecast +3.2% (range +1.0% to +5.0%)
Japan Dec core machine orders +16.8% y/y (Nov -6.4%); 1st rise in two months; median forecast +1.0% (range -0.5% to +4.4%)
Japan govt maintains view: machinery orders showing signs of pickup
Japan Dec machine orders surge backed by those for chemical devices from refineries and nuclear power facilities from non-ferrous metal makers
Japan Dec machine orders rise also led by persistent demand for computers for automation and digitization aimed at alleviating labor shortages
Japan Dec core machine orders manufacturing sector +25.1% m/m (Nov -10.8%); 1st rise in three months
Japan Dec core machine orders non-manufacturing sector +8.2% m/m (Nov -10.7%); 1st rise in two months
Japan OctDec core machine orders +7.9% q/q (-2.1% in JulySept) vs. Q4 median economist forecast +2.7%, official projection +0.2%
Japan OctDec core machine orders manufacturing sector -1.4% q/q, 1st drop in three quarters vs. +3.4% in JulySept
Japan OctDec core machine orders non-manufacturing sector +12.8% q/q, 1st rise in two quarters vs. -5.0% in JulySept
Market Consensus Before Announcement
Japan’s core machinery orders, a key leading indicator of business investment in equipment and software, are expected to rise from the previous month for the first time in two months in December, supported by solid capital spending sentiment and persistent demand for computers as firms digitalize and automate workplaces to ease labor shortages.
Core machinery orders are forecast to increase 3.2 percent from the previous month in December, rebounding from an unexpectedly sharp 11.0 percent drop in November. In November, orders were weighed down by declines in nuclear power-related orders from nonferrous metals and electric machinery producers, as well as weaker demand for train cars and engines from transport firms.
On a year-on-year basis, core orders, excluding those from electric utilities and for ships, are expected to rise 1.0 percent in December, after falling 6.4 percent a month earlier. The November decline marked the first annual drop in 14 months.
In November, the Cabinet Office maintained its assessment that “machinery orders are showing signs of a pickup.” The government upgraded its view in October for the first time since the November 2024 report.
For the October-December quarter, orders are projected to rise 2.7 percent from the previous quarter after falling 2.1 percent in July-September. That would mark the first quarterly increase in two quarters and exceed the Cabinet Office’s preliminary forecast of a 0.2 percent rise.
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.