Japanese machine tool orders surge 38% YoY despite monthly dip

Home orders softened month on month, but held firm year on year.

Japan's machine tool builders posted total orders worth ¥177.01b in May, representing a 37.5% year-on-year increase even as it fell 6.3% month on month, the industry reported.

The Japan Machine Tool Builders' Association noted the May orders marked the 11th straight month of annual growth, and the second consecutive month of month-on-month decline.

Despite this, total orders exceeded ¥120b for the 15th consecutive month, marking the fourth-highest level on record. Both domestic and overseas demand slipped compared with April, but remained at high levels, showing a year-on-year increase of over 37%.

The association struck a cautiously optimistic tone on the outlook, saying further growth in demand for capital equipment is anticipated, with domestic demand expected to benefit from policy support, while robust demand related to AI and robotics in the overseas market is likely to dispel uncertainties stemming from the international situation. It added, however, that it is important to remain mindful of the potential impact that inflation concerns could have on capital investment.

DOMESTIC MARKET

Domestic orders fell by 8.0% from April to ¥45.33b, though this still marked a 37.3% increase over the same month of the previous year.

The picture varied sharply across sectors. Compared with April, orders fell by 7.6% in industrial machinery, by 17.1% in motor vehicles, and by 34.3% in electrical & precision machinery, while orders in aircraft, shipbuilding & transport equipment rose by 89.7%.

EXPORT MARKETS

Overseas orders fell by 5.7% from April to ¥131.68b, the second straight monthly decline, yet rose 37.6% year on year — the twentieth consecutive month of annual growth.

Regionally, the picture was one of month-on-month softness but strong annual gains. Orders from Asia fell 1.6% from April to ¥75.03b, an increase of 66.1% on the year. European orders fell 17.2% from April to ¥16.80b, up 6.1% year on year, whilst North American orders fell 9.0% from April to ¥37.36b, an increase of 13.9% over the same month last year.