Private Sector Machinery Orders in Japan

Measures the value of machinery orders received by Japan's private sector (民需), excluding the volatile orders from ships and electric power companies. It is a leading indicator of corporate capital spending (capex), published by the Cabinet Office (ESRI) from a survey of the main machinery manufacturers.

Based on a monthly survey of a sample of leading machinery makers (accounting for the bulk of national output) covering the monetary value of new orders. Ships and electric power firms are stripped out because of their volatility. Seasonally adjusted figures are used for the monthly change (MoM) and unadjusted ones for the year-on-year change (YoY).

It is one of the most closely watched leading indicators of Japanese business investment: today's orders turn into capital spending over the following two to three quarters. A strong reading points to stronger corporate investment and GDP growth, while a weak one signals caution. It is closely watched by the Bank of Japan and by industrial equity analysts.

The series is extremely volatile month to month: a single large order (for example, a complete industrial plant) can distort the total, so the market pays more attention to the three-month trend than to any single print. Being a sample survey, it is subject to revisions.