| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -0.3% | -2.0% to 6.5% | 8.7% | -9.4% |
| Year over Year | 9.9% | 8.5% to 17.4% | 15.6% | 5.9% |
Highlights
Japan's core machinery orders, a key leading indicator of business investment in equipment and software, made a good start to the second quarter, posting an unexpected rebound in April, up a solid 8.7% on the month, after slumping 9.4% in March in payback for a 13.6% surge on one-off large orders in February. The data showed continued gains in orders for computers, reflecting the need to digitize operations to cope with labor shortages and strong demand for artificial intelligence data centers.
The Cabinet Office maintained its assessment that machinery orders are showing signs of a pickup." The three-month moving average rose 3.7% in April after slipping 0.9% in March rising 7.5% previously.
Last month, the Cabinet Office projected 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.
Details:
Japan Apr core machine orders +8.7% m/m (Mar -9.4%), 1st rise in 2 months; median forecast -0.3% (range -2.0% to +6.5%)
Japan Apr core machine orders +15.6% y/y (Mar +5.9%); 5th straight rise; median forecast +9.9% (range +8.5% to +17.4%)
Japan govt maintains view: Machinery orders showing signs of pickup
Japan Apr machine order m/m rise led by higher orders for engines from shipyards, computers from electric/telecom machinery makers
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 on the month in April while extending their year-on-year gains to a fifth consecutive month as corporate appetite for capital spending remained resilient despite geopolitical uncertainty stemming from war in the Middle East.
Capital investment related to semiconductors is expected to remain active in April amid growing expectations of expanding demand for artificial intelligence technologies. Machine tool orders also posted a sharp increase during the month, providing support for core machinery orders.
Core machinery orders are seen falling 0.3 percent on the month in April after falling 9.4 percent a month earlier. The March decline partly reflected a payback from the 13.6 percent surge recorded in February, when one-off large-ticket deals boosted orders. In March, the Cabinet Office maintained its assessment that machinery orders are “showing signs of a pickup."
On a year-over-year basis, core machinery orders are expected to rise 9.9 percent in April after increasing 5.9 percent in March. 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.