FX.co ★ Japan Machinery Orders Decline Less Than Expected

In May 2025, Japan experienced a 0.6% month-over-month decline in core machinery orders, reaching ¥913.5 billion. This decrease, although present, was much less severe than the 9.1% drop observed in April and surpassed market expectations, which had anticipated a 1.5% fall. The reduction was primarily attributable to the manufacturing sector, with orders decreasing by 1.8% to ¥448.5 billion. Significant downturns were noted in the chemical and chemical products sector (-38.7%), business-oriented machinery (-29.3%), and pulp, paper, and paper products (-18.5%). Conversely, non-manufacturing orders witnessed a 1.8% increase, reaching ¥479.3 billion. This growth was fueled by substantial gains in sectors such as mining and quarrying of stone and gravel (91.5%), real estate (76.5%), and finance and insurance (16.7%). On an annual basis, private-sector machinery orders grew by 4.4% in May, which was a slowdown from April’s 6.6% increase but still exceeded projections of 3.4%. Core machinery orders are regarded as a critical, albeit volatile, leading indicator of capital expenditure plans for the forthcoming six to nine months.