–Core Orders Dip in Q4 as Largely Expected, Seen Up in Q1 for 1st Rise in 4 Quarters
–Core Orders Mark 10th Straight Y/Y Drop Despite Solid Capex Plans
–Cabinet Office Keeps View: Machine Orders Pausing
By Max Sato
(MaceNews) – Japanese core machinery orders, the key leading indicator of business investment in equipment, rebounded 2.7% in December on higher demand from manufacturers, as largely expected (consensus was 3.1%), after marking their first drop in three months with a sharp 4.9 percent drop in November, data released Monday by the Cabinet Office showed. Demand for computers remains generally strong but there was a pullback in orders from some industries.
Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, marked their 10th straight decline from a year earlier, down 0.7%, as expected, following a 5.0% slump in the prior month.
Core orders dipped 1.0% on quarter in the October-December quarter after falling 1.8% in July-September. It was weaker than the official forecast of a 0.5% rise provided in November. The median forecast was a 0.8% drop.
The Cabinet Office forecast that core orders would rise 4.6% in the January-March quarter for the first increase in four quarters, led by a sharp gain in orders from the manufacturing sector, which is expected to offset a slight drop in those from the non-manufacturing sector.
The Cabinet Office maintained its assessment after downgrading it in January 2023, saying, “Machinery orders are pausing.”
Companies are generally cautious about implementing their solid capital investment plans, as seen in the third straight quarterly decline in capex in the fourth quarter GDP data. There remains potential demand for automation amid labor shortages as well as government-led digitization and emission control.
Other details from machinery orders data:
* Core machinery orders rose 2.7% from the previous month on a seasonally adjusted basis to ¥838.8 billion in December after slumping 4.9% to ¥816.7 billion in November, which was the lowest amount since ¥804.3 billion in April 2021. It was slightly weaker than the median economist forecast of a 3.1% rise (forecasts ranged from 0.5% to 5.0% gains).
* Orders from manufacturers jumped 10.1% on the month in December after plunging 7.8% in November for the first rise in two months while those from non-manufacturers in the core measure fell 2.2% for the second straight drop after edging down 0.4% the previous month.
* The decline in core orders in the fourth quarter was due to lower orders for chemical equipment, cranes and conveyors from chemical makers and for computers from leasing and other service providers. There was higher demand for boilers and turbines from “other manufacturers,” which fluctuated from month to month.