Commentary Directory

Japan Machinery Orders: July 2023

Jacob Hess
September 13, 2023

Japan Machinery Orders

9/14/2023 (July 2023)

9.8% MoM

Above Expectations

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Private Sector Orders +26.6% MoM
Machinery Orders (ex-volatile) -1.1% MoM
Q3 2023 Orders Forecast -2.3% QoQ

Japanese machinery orders surged 9.8% MoM in July with private sector machinery orders up 26.6% MoM. However, excluding volatile orders, there was actually a -1.1% MoM decline. The manufacturing sector saw machinery orders decline -5.3% MoM while the non-manufacturing sector saw orders up 1.3% MoM. Non-manufacturing orders have been volatile over the course of Q2 but ultimately settled at a decline of -8.8% QoQ which suggests a sharp turn in demand in that sector. Overseas orders improved 1.6% MoM which did little to reverse the -6.9% MoM decline in June.


The forecasts for Q3 are not rosy. In total, machinery orders are expected to fall -2.8% QoQ with similar estimates for the private sector and the total excluding volatile orders. Manufacturing orders are expected to decline -2.3% QoQ, and non-manufacturing orders are expecting to fall -1.4% QoQ. The Japanese Cabinet Office is specifically expecting a huge decline in government orders of -22.5% QoQ; although, this would just be a reversal of strong Q1 and Q2 order growth of 19.9% QoQ and 12.2% QoQ. Assuming this month’s report was an anomaly, we should expect the August report to be deeply in the red (on the headline figure, not necessarily the non-volatile total). When looking at the bigger picture, the trend is not supportive of GDP growth in Q3.