In September, core machinery orders, a leading indicator for capital spending over a three- to six-month period, logged the sharpest contraction since records began in 1987. The dismal performance reflected a strong earthquake and a typhoon in September, which disrupted economic activity, as well as a base effect from healthy expansions in the previous two months. Headline machinery orders (private sector, excluding volatile orders) fell 18.3% in September from the previous month in seasonally-adjusted terms, contrasting the 6.8% increase in August. The print was well below the 9.0% decrease expected by market analysts.
Both manufacturing and non-manufacturing orders recorded a sharp decline in September as did export orders.
Compared to the same month of the previous year, core machinery orders contracted 7.0% in September, contrasting August’s 12.6% rise. The annual average variation in core machinery orders fell from 3.5% in August to 3.2% in September.
Japan Fixed Investment ForecastFocusEconomics Consensus Forecast panelists expect private non-residential investment to rise 2.5% in 2019, which is up 0.1 percentage points over last month’s projection. In 2020, the panel sees private non-residential investment expanding 1.3%. In addition, FocusEconomics Consensus Forecast panelists expect gross fixed investment to increase 2.0% in 2019, which is up 0.2 percentage points over last month’s projection. In 2020, the panel sees gross fixed investment growth at 0.8%.