November Machinery Orders

Both Manufacturing and Non-Manufacturing Orders Reported Strong Results, Exceeding Market Consensus by a Wide Margin

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January 16, 2014

  • Shotaro Kugo

Summary

◆According to statistics for machinery orders in November, 2013, private sector demand (excluding for shipbuilding and from electric power) grew for the second consecutive month, increasing by 9.3% in comparison with the previous month, thereby exceeding market consensus (+1.1%) by a wide margin. Meanwhile, the 3-month moving average rose for the fifth consecutive month, showing that machinery orders are strengthening their growth trend.


◆Manufacturing orders grew for the first time in two months, up 6.0% from the previous month. Non-manufacturing orders (excluding for shipbuilding and from electric power) continued to improve, achieving gains for the second consecutive month with a month to month increase of 8.1%.


◆Overseas orders declined for the second consecutive month, falling by 12.2% in comparison with the previous month. The 3-month moving average indicates that it is the first setback overseas orders have had in four months, occurring due to a variety of weak factors.


◆The CAO has projected the first slide in three quarters for private sector demand (excluding for shipbuilding and from electric power) in Oct-Dec 2013 (down 2.1% q/q). However, DIR sees a very high possibility that machinery orders will achieve growth for the third consecutive quarter in the October-December 2013 period. Trends in corporate earnings also lead us to believe that equipment investment will continue to improve, creating the backdrop for continued growth in machinery orders.

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