Japan: June core machinery orders likely to rise 5.1% m-o-m - Nomura

Analysts at Nomura are looking for June core machinery orders (private sector, excluding orders for ships and from electric power companies) of Japan to rise 5.1% m-o-m and if this forecast proves correct, then April-June core machinery orders would fall 2.4% q-o-q.

Key Quotes

“Related data for June was a mixed bag. Machine tool orders for customers in Japan, considered a coincident indicator of machinery orders, fell 2.0% m-o-m (figures seasonally adjusted by Nomura). Production of items with short lead times from order to production rose a strong 4.5% m-o-m.”

“Capex plans (including land purchasing expenses) as reported in the June 2017 BOJ Tankan survey were up 2.9% y-o-y for companies of all sizes and industries, which is high relative to readings taken at the same time in the years since 2010, indicating strong corporate appetite for capex.”

“Along with core machinery orders for June, machinery manufacturer order forecasts for Q3 2017 will be released. We expect the forecast to be an indicator of whether or not machinery capex will rebound in the second half of the year, amid expectations for a second quarter of decline in core machinery orders.”