July Machinery Orders

Downward trend revealed with ever more clarity

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September 10, 2015

  • Shotaro Kugo
  • Shunsuke Kobayashi

Summary

◆According to statistics for machinery orders in July 2015, the leading indicator for domestic capex, private sector demand (excluding shipbuilding and electrical power), were down by -3.6% m/m, falling below market consensus as well (+3.0%). Not only did the non-manufacturing industry exhibit a more marked downtrend, the manufacturing industry, which had until now been exerting the most traction on the index, also weakened. Results were negative overall.


◆Looking at orders by source of demand, the manufacturing industries suffered declines for the second consecutive month at -5.3% m/m. The industry peaked out in May after special projects gave it a major boost, but now the downward trend has revealed itself with ever more clarity. Not only that, in terms of basic levels the manufacturing industry fell below its performance of early 2015, overall manufacturing industry performance lacking in dynamism. Non-manufacturing orders (excluding shipbuilding and electric power) suffered a m/m decline for the first time in two months at -6.0%. A wide range of industries suffered declines in addition to declining numbers for the headliners, bringing notably weak results.


◆According to the CAO outlook for the Jul-Sep 2015 period, private sector demand (excluding shipbuilding and electrical power) is expected to grow by +0.3% q/q. In order to achieve this outlook, month-to-month growth of +9.6% will be required in both the months of August and September, so the hurdle is high. Hence machinery orders, which until now had continued in an upward trend, stand a good possibility of marking time in the Jul-Sep period.

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