August Machinery Orders

General-purpose & production machinery achieves major growth

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October 11, 2017

  • Kazuma Maeda
  • Shunsuke Kobayashi

Summary

◆According to statistics for machinery orders in August, the leading indicator for domestic capex and private sector demand (excluding ships and electrical power), orders grew for the second consecutive month by +3.4% m/m. Manufacturing achieved major growth at +16.1% centering on general-purpose & production machinery, thereby helping to increase overall results.


◆While the manufacturing industry achieved major growth in August due to receiving large-scale orders, the growth trend is not that strong when the numbers are averaged out. And while the non-manufacturing industry also grew for the third consecutive month, the degree of certainty that the Cabinet Office forecast for the Jul-Sep 2017 period can be achieved is low. The Cabinet Office forecast sees orders up by +13.5% q/q. However, in order to make this target, September orders will have to win growth of more than +22.2% m/m.


◆Machinery orders, the leading indicator for capex, are expected to experience ups and downs in the future. Investment in maintenance & repair looks promising in the manufacturing industry, but willingness to invest in capacity increase is not strong. In order for capex spending to become full-fledged, operating rates must grow more. The non-manufacturing industry is expected to carry out investments in transport and distribution infrastructure with the continuing growth in foreign visitors to Japan, as well as expectations regarding the 2020 Tokyo Olympics and Paralympics.

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