Core machinery orders—which cover the private sector, exclude volatile orders and are a leading indicator for capital spending over the coming three-to-six-month period—decreased 1.5% in month-on-month seasonally-adjusted terms in June, which contrasted May's 7.8% increase.
On an annual basis, machinery orders rose at a quicker rate of 18.6% in June (May: +12.2% yoy), the best result since May 2015. Accordingly, the trend improved sizably, with the annual average variation of machinery orders coming in at an over one-year high of minus 1.4% in June, up from May's minus 5.0%.
June’s report also included machinery manufacturers’ forecasts for July–September 2021, which projects a 11.0% increase in core machinery orders over the period, thus pointing towards improving optimism regarding capital spending after Q2’s 4.6% rise in machinery orders. However, the order forecast survey took place in late June, amid falling Covid-19 cases and before late July’s announcement of a further state of emergency, As such, capital expenditure will likely have been lowered than expected so far in Q3, as daily infections surged throughout July and August.
FocusEconomics Consensus Forecast panelists project gross fixed investment to grow 1.3% in 2021, which is down 0.2 percentage points from last month’s estimate, and increase 2.6% in 2022.