Japan machinery orders: No respite in August

by SR on October 12, 2012

Month-on-month change in seasonally adjusted Japan machinery orders, excluding orders for ships and power generation equipment

Not terrible but not getting any better

I’m going to be brief here because this is a subject that gets commented to death. The headline figure for Japan machinery orders (released 2012-10-11 by the ESRI of the Japan Cabinet Office) showed that private orders excluding large and volatile orders for ships and power generation equipment fell 3.3% in August 2012 compared to the previous month (this is a seasonally adjusted series). The charts at the top of the page and directly below put August in its historical context, showing that while a negative figure is of course negative, -3.3% is not a terrible figure. My concern is that September will be worse – see comments on what looks like an unexpected plunge in Japan’s auto exports in September in this post.

Month-on-month change in seasonally adjusted private-sector Japan machinery orders, excluding orders for ships and power generation equipment

The graphic below shows the performance of Japan’s listed machinery stocks, year-to-date. Click for a larger image. Most, as you can see, have underperformed the TOPIX market index.

Japan machinery stocks, change in share price year-to-date

Real data

The non-seasonally adjusted data – remember that the sales that the companies will report are based on ‘real’ orders not seasonally adjusted figures – shows further gentle deterioration. Core private orders (i.e. those excluding ships and power generation) for the January to August period have reached 5,888 billion yen, up just 0.2% over the same period in 2011. For the month of August 2012 alone, core private orders fell 6.1% YoY and also fell 4.5% month-on-month. As you can see from the chart below, the year-on-year gains for core private orders have been trending down for most of the year. I had thought to see signs of stabilisation in the July number, but we’re not seeing a recovery in August. I found it interesting that overseas orders for machine tools were slightly less bad in September than in August; maybe this points to a bottoming within the next couple of months.

Year-on-year change in cumulative private orders (not seasonally adjusted) in 2012

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