| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -13.2% | -20.0% to -3.1% | -9.4% | 13.6% |
| Year over Year | 4.5% | -9.8% to 8.2% | 5.9% | 24.7% |
Highlights
Japan's core machinery orders, a key leading indicator of business investment in equipment and software, showed firms are upgrading factories and offices to cope with widespread labor shortages. They fell 9.4% on the month in March, partially in payback for the 13.6% surge on one-off large orders recorded the previous month. The decline was smaller than the median economist forecast for a 13.2% fall and core orders rose 6.4% on quarter in the January-March quarter, above consensus (+5.7%) and much stronger than the official projection of a 4.5% drop provided three months ago.
The Cabinet Office maintained its assessment that machinery orders are showing signs of a pickup." It noted that the March drop followed the sharp gain in February and that the three-month moving average slipped just 0.9% after rising a decent 7.5% previously. What led the February jump contributed to most of the March decline: orders for nuclear power facilities from non-ferrous metal producers, engines from shipyards, machines including food processors from"other" non-manufacturers and computers from leasing firms.
Looking ahead, the Cabinet Office forecast that core orders would rise a slight 0.3% on quarter in April-June for a third straight increase, indicating there remains solid demand for digitizing and automating operations.
On the year, core machinery orders, which exclude orders from electric utilities and for ships, rose 5.9% in March for a fourth consecutive month, slowing from a 24.7% gain in February.
Details:
Japan Mar core machine orders -9.4% m/m (Feb +13.6%), 1st fall in 2 months; median forecast -13.2% (range -20.0% to -3.1%)
Japan Mar core machine orders +5.9% y/y (Feb +24.7%); 4th straight rise; median forecast +4.5% (range -9.8% to +8.2%)
Japan govt maintains view: machinery orders showing signs of pickup
Japan Jan-Mar core machine orders +6.4% q/q (+6.6% in Oct-Dec) vs. Q1 median economist forecast +5.7%, official projection -4.5%
Japan Jan-Mar core machine orders manufacturing sector +10.0% q/q, 1st rise in 2 quarters vs. -0.8% in Oct-Dec
Japan Jan-Mar core machine orders non-manufacturing sector +6.2% q/q, 2nd straight quarter rise vs. +11.3% in Oct-Dec
Market Consensus Before Announcement
Japan’s core machinery orders, a key leading indicator of business investment in equipment and software, are expected to reverse course in March after unexpectedly strong growth a month earlier, as the impact of tensions in the Middle East is seen more clearly weighing on orders.
Core machinery orders in March are projected to fall 13.2 percent on the month after surging 13.6 percent in February, when large-scale orders from sectors such as non-ferrous metals unexpectedly boosted the figures.
March orders are expected to weaken, in line with other capital investment indicators. Domestic shipments of capital goods excluding transport equipment in the industrial production statistics, which are regarded as a coincident indicator, fell on the month in March. There are also signs that domestic demand for machine tools slowed in March.
On a year-on-year basis, machinery orders are expected to rise 4.5 percent in March after recording double-digit gains for the previous three months. Orders rose 24.7 percent in February, 13.7 percent in January and 16.8 percent in December.
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.