June Machinery Orders

Advance of 6.8% q/q in overall orders in Apr-Jun; non-manufacturing orders treading water

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August 13, 2013

  • Tsutomu Saito

Summary

◆Machinery orders (Cabinet Office [CAO]; private sector excl. those for shipbuilding and from electric utilities; this basis hereafter unless otherwise specified) declined 2.7% m/m in June, the first slide in two months but narrower than consensus expectations (down 7.0%). As a result, Apr-Jun orders increased 6.8% q/q, the first gain in five quarters.


◆By demand source, manufacturing orders posted the second consecutive monthly gain (up 2.4% m/m), but non-manufacturing orders posted the first slide in two months (down 17.5%). The former were driven by advances in those from electrical machinery and automobile/auto parts industries. In the case of the latter, in addition to reactionary declines to the previous month’s surges, slides were seen for those from the construction industry and wholesaling/ retailing firms.


◆Overseas orders declined 16.7%, the first slide in two months. They have seen significant volatility recently. However, looking at exports of general machinery, those to the US remained firm and those to China began to signal a bottoming out. Thus, overseas orders will likely continue to grow.


◆As a whole, machinery orders continue to recover. CAO released a projection that machinery orders would decline 5.3% q/q in Jul-Sep 2013, the fist slide in two quarters. This would transpire only if they decline 3.3% m/m in each month from July to September. However, even if they decline 0.6% in each month, they would post the second consecutive q/q gain in Jul-Sep, a very likely scenario.

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