August Machinery Orders

◆According to statistics for machinery orders in August 2014, the leading indicator for domestic capex, private sector demand (excluding shipbuilding and electric power), were up by +4.7% m/m, greatly exceeding market consensus (+0.5%). This represents the third consecutive month of growth, indicating that orders continue to work their way toward a comeback.

◆The manufacturing industries suffered a decline for the first time in three months at -10.8% m/m. However, this was due mainly to the fact that the previous month’s results hit a one-time high due to special factors. Looked at in terms of averages the growth trend continues. Non-manufacturing orders (excluding shipbuilding and electrical power) achieved growth for the first time in two months at +10.7% m/m. Though the overall result shows the non-manufacturing industries to be moving toward a comeback, many industries actually suffered declines, hence results were lacking in vitality.

◆Overseas demand grew +29.1% m/m moving into a growth trend despite ups and downs.

◆According to the CAO outlook for the Jul-Sep 2014 period, private sector demand (excluding shipbuilding and electrical power) is expected to achieve growth of +2.9% q/q. This outlook will be achievable with September results at -4.7% m/m. Machinery orders are therefore expected to have an excellent chance at achieving q/q growth for the first time in two quarters.