| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -5.0% | -6.5% to -0.7% | -12.4% | 8.7% |
| Year over Year | 13.7% | 12.2% to 16.6% | -1.9% | 15.6% |
Highlights
Japan May core machine orders -12.4% m/m (Apr +8.7%), 1st fall in 2 months; median forecast -5.0% (range: -6.5% to -0.7%)
Japan May core machine orders -1.9% y/y (Apr +15.6%); 1st fall in 6 months; median forecast +13.7% (range: +12.2% to +16.6%)
Japan govt maintains view: machinery orders showing signs of pickup
Japan May machine orders m/m drop led by lower orders for engines from shipyards, computers from electric, general machinery makers, transport firms
Japan Cabinet Office: May drop in machine orders doesn't prompt it to downgrade official view as it's largely in payback for jump in April
Japan’s core machinery orders, a key leading indicator of business investment in equipment and software, plunged 12.4% (consensus -5.0%) on the month to a six-month low of ¥962.0 in May in payback for an unexpected rebound in April, when they rose 8.7% to a record high of ¥1.099 trillion. The decline was led by lower orders for engines from shipyards as well as cranes and conveyors from general machine makers and mining firms. There was also a pullback in orders for computers from electric equipment producers, general machinery makers and transport firms after recent gains.
The Cabinet Office maintained its assessment that machinery orders are “showing signs of a pickup." The three-month moving average fell 4.8% in May after rising 3.7% in April and slipping 0.9% in March but it didn’t prompt the government to downgrade its view as the weak May data is “a single month movement” after solid figures in April.
From a year earlier, too, core orders excluding those from electric utilities and for ships came in much weaker than expected, down 0.9%, for the first drop in six months after surging 15.6% the previous month.
Market Consensus Before Announcement
Japan’s core machinery orders, a key leading indicator of business investment in equipment and software, are expected to decline on the month in May after unexpectedly rising a month earlier. The decline is likely to reflect a reactionary pullback following April’s sharp increase, when orders from industries including shipbuilding surged.
Core machinery orders are projected to fall 5.0 percent on the month in May after rising 8.7 percent in April, supported by solid gains in computer orders. The Cabinet Office also maintained its assessment that machinery orders are “showing signs of a pickup.”
Capital spending is expected to remain resilient, supported by expectations of expanding demand for artificial intelligence technologies, with annual core machinery orders seen rising 13.7 percent in May after gaining 15.6 percent in April, expected to mark a sixth straight month of year-on-year growth.
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.