April Machinery Orders

◆According to statistics for machinery orders in April 2015, the leading indicator for domestic capex, private sector demand (excluding shipbuilding and electrical power), were up by +3.8% m/m, while at the same time exceeding market consensus (-2.1%). The CAO outlook for the Apr-Jun period was expecting major declines, and with fears of a setback haunting machinery orders, came up with a bearish consensus. But in an unexpected (though welcome) turnaround, results were good.

◆Looking at results by source of demand, the manufacturing industries achieved growth for the second consecutive month at +10.5% m/m. The manufacturing industry had seemed somewhat lacking in dynamism recently, and the CAO outlook for the Apr-Jun period therefore expressed expectations of a decline. However, this month’s results have swept away all doubts. Meanwhile, non-manufacturing orders (excluding shipbuilding and electric power) were somewhat lacking in energy, suffering an m/m decline for the first time in two months at -0.6%.

◆According to the CAO outlook for the Apr-Jun 2015 period, private sector demand (excluding shipbuilding and electrical power) is expected to decline for the first time in four quarters at      -7.4% q/q. The outlook is expected to be achievable even if m/m declines of -12.5% are experienced in both May and June. However, if m/m declines of -5.1% are experienced in May and June, q/q growth can still be reached during the Apr-Jun 2015 period.