Japan's core machinery orders rebound 5.2% in August as total orders fall 3.7%

Japan's core private-sector machinery orders rose 5.2% in August from July on a seasonally adjusted basis, the Cabinet Office reported on 15 October. The measure excludes ships and orders from electric power companies, two volatile categories. It is the first rise in two months. Total orders received by 280 manufacturers operating in Japan went the other way, falling 3.7%.

The assessment stays where it was

The Cabinet Office's Economic and Social Research Institute treats core private orders as a leading indicator of private capital spending. The three-month moving average of that series rose 3.6% from the previous month. The office kept its assessment that machinery orders are showing signs of picking up. It did not upgrade it.

Why the headline numbers diverge

The total covers more than the core measure: overseas demand, public-sector demand and orders through agents, as well as ships and power companies. All of those fell in August, as did private demand taken as a whole. Manufacturing orders rose 1.6% and non-manufacturing orders (excluding ships and electric power) rose 2.9%.

The Cabinet Office seasonally adjusts each series on its own, so the breakdown by demand category does not add up to the adjusted total.

A series that swings

The August gain follows a 3.7% fall in core private orders in July, a 9.7% rise in June and a 12.4% fall in May. Earlier Tokyo Brief coverage. Over four months the series has alternated between gains and falls of that size, and the Cabinet Office's unchanged wording reflects a rebound within that pattern rather than a stronger reading.

The release gives a seasonally adjusted total of ¥4.04tn for August, down from ¥4.20tn in July in the underlying table. The decline in total orders came from the categories outside the core measure: overseas demand fell 7.7% and public-sector demand fell 6.1%.