June 12, 2014
Summary
◆According to statistics for machinery orders in April 2014, the leading indicator for domestic capex, private sector demand (excluding shipbuilding and electric power), fell for the first time in two months, down -9.1% m/m, while at the same time exceeding market consensus, which recorded -10.8%. the decline was in reaction to the previous month’s major growth, but was not nearly as steep as predicted, and therefore results are considered to be positive. Averaged out, machinery orders are still continuing growth.
◆As for performance by source of demand, manufacturing industries suffered a decline for the first time in two months at -9.4%, non-manufacturing orders (excluding shipbuilding and electrical power) registered growth for the second consecutive month at +0.9% m/m.
◆Overseas orders achieved major m/m growth of +71.3%, a record high. Most likely this is due to large orders received by chemical machinery and shipbuilding.
◆According to the CAO outlook for the Apr-Jun 2014 period, private sector demand (excluding shipbuilding and electrical power) is expected to achieve its fifth consecutive period of growth at +0.4% q/q. This figure is seen as being achievable even if growth in May and June remains modest at +0.2% m/m. Therefore, we expect to see a continuation of growth for machinery orders in the Apr-Jun period.
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