| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -0.1% | -2.0% to 3.9% | 13.6% | -5.5% |
| Year over Year | 12.0% | 7.5% to 14.0% | 24.7% | 13.7% |
Highlights
Japan's core machinery orders, a key leading indicator of business investment in equipment and software, rose sharply 13.6% on the month in February, far exceeding forecasters' estimates and marking the first increase in two months.
Orders surged 24.7% on the year, also beating the median forecast of a 12.0% rise, after increasing 13.7% in January.
The Cabinet Office maintained its assessment that machinery orders are showing signs of a pickup, noting that February's sharp increase was driven by large-scale projects. Month-on-month gains were led by orders for nuclear power facilities and aircraft.
Details:
Japan Feb core machine orders +13.6% m/m (Jan -5.5%), 1st rise in 2 months; median forecast -0.1% (range -2.0% to +3.9%)
Japan Feb core machine orders +24.7% y/y (Jan +13.7%); 3rd straight rise; median forecast +12.0% (range +7.5% to +14.0%)
Japan govt maintains view: machinery orders showing signs of pickup
Japan govt: Feb machinery order volume significantly boosted by large-scale projects
Japan Feb machine order m/m rise led by nuclear power facilities, aircraft
Market Consensus Before Announcement
Japan’s core machinery orders, a key leading indicator of business investment in equipment and software, are expected to edge down 0.1% in February, marking a second straight monthly decline after a 5.5% drop in January.
Still, the underlying trend in machinery orders is seen as firm, supported by demand for machine tools. The impact of heightened Middle East tensions following U.S. and Israeli attacks on Iran in late February is viewed as having had only a limited effect on orders.
Orders are also likely to be underpinned by steady services-sector demand for computers, driven by ongoing automation and digitalization efforts to ease labor shortages.
The underlying strength in orders was underscored by the Bank of Japan’s March Tankan survey, released April 1, which showed corporate investment sentiment remained resilient despite escalating tensions in the Middle East.
On a year-on-year basis, machinery orders are expected to rise for a third straight month in February, increasing 12.0% after a 13.7% gain in January.
The month-on-month decline in January reflected a pullback in manufacturing demand following strong gains in prior months. Orders were weighed down by reduced demand for nuclear-related facilities from non-ferrous producers and for chemical equipment from refineries.
Despite the January drop, the government maintained its assessment that machinery orders are “showing signs of a pickup,” noting that the decline largely represented a payback for large orders booked in December. The three-month moving average edged down just 0.1% in January after rising a revised 3.8% previously.
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.