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13 Jan 2016
Japan: November core machinery orders preview - Nomura
FXStreet (Delhi) – Yoshiyuki Suimon, Research Analyst at Nomura, expects a decline of 5.4% m-m in Japanese November core machinery orders (private sector, excluding orders for ships and from electric power companies), which would be the first decline for three months.
Key Quotes
“In other machinery order-related data for November, machine tool orders (Japan Machine Tool Builders' Association) fell 6.1% m-m, following a rise of 4.0% in October (seasonal adjustment by Nomura). In addition, industrial production of items with short lead times from order receipt to sales was down 4.5% m-m in November, compared to a decline of just 2.1% in October.
Core machinery orders have risen sharply for two consecutive months, increasing 7.5% in September and 10.7% in October, but in the past large increases over two consecutive months have often been followed by a large decline in the subsequent month. In view of the above, we expect November core machinery orders to turn negative with a 5.4% m-m decline. If orders decline in line with our forecasts, orders for Oct-Nov will have risen 10.8% from the Jul-Sep average, marking a rebound from the 10.0% q-q decline in July-September.
The market consensus forecast (Bloomberg survey median) of a 7.3% m-m decline is slightly weaker than our own forecast. However, we see some upside versus the consensus figure, based on the prospects of an uptick in production-related statistics through the FY-end, and the possibility of major core machinery-related orders, which have been notably absent in data for five consecutive months.”
Key Quotes
“In other machinery order-related data for November, machine tool orders (Japan Machine Tool Builders' Association) fell 6.1% m-m, following a rise of 4.0% in October (seasonal adjustment by Nomura). In addition, industrial production of items with short lead times from order receipt to sales was down 4.5% m-m in November, compared to a decline of just 2.1% in October.
Core machinery orders have risen sharply for two consecutive months, increasing 7.5% in September and 10.7% in October, but in the past large increases over two consecutive months have often been followed by a large decline in the subsequent month. In view of the above, we expect November core machinery orders to turn negative with a 5.4% m-m decline. If orders decline in line with our forecasts, orders for Oct-Nov will have risen 10.8% from the Jul-Sep average, marking a rebound from the 10.0% q-q decline in July-September.
The market consensus forecast (Bloomberg survey median) of a 7.3% m-m decline is slightly weaker than our own forecast. However, we see some upside versus the consensus figure, based on the prospects of an uptick in production-related statistics through the FY-end, and the possibility of major core machinery-related orders, which have been notably absent in data for five consecutive months.”