July Machinery Orders

◆According to statistics for machinery orders in July 2014, the leading indicator for domestic capex, private sector demand (excluding shipbuilding and electric power), were up by +3.5% m/m, though figures fell somewhat below market consensus (+4.0%). Considering the major downturn in April (-9.1% m/m) and May (-19.5%), growth was somewhat lacking in vigor, but these figures represent the second consecutive month of growth for machinery orders, which are now showing definite signs of a comeback.

◆The manufacturing industries achieved growth for the second month in a row at +20.3% m/m. The extent of growth was considerable, and it seems the manufacturing industries have regained the lost ground suffered during the declines of previous months (down -9.4% m/m in April and -18.6% in May). This sudden jump in orders may be due to large projects having come in all at once and hence only temporary. But even if we discount it, most manufacturing industries also reported growth, so it is safe to say that manufacturing industry orders are on their way to a comeback.

◆Non-manufacturing orders (excluding shipbuilding and electrical power) suffered a decline for the first time in two months by -4.3% m/m. In contrast to the performance seen in the manufacturing industries, non-manufacturing orders remained stagnant. Overall figures were brought down by declines in the construction industry (-12.4% m/m), leasing (-27.5%), and real estate (-25.5%).