Significant decline in Japanese machine tool orders in the first half of 2012

The trend of the Japanese machine tool order as an economic indicator shows that the economy is decelerating. The amount of orders for the first half of 2012 (January to June) was calculated on the basis of the first half of the year, showing the first decline in three years. In addition to the sharp decrease in orders for China, the decline in equipment investment due to the European debt crisis and the decline in international competitiveness due to the appreciation of the yen are also important reasons.

The Japan Machine Tool Industry Association announced on July 18 that the amount of machine tool orders for the first half of 2012 was 636.4 billion yen, a decrease of 5.6% year-on-year. Since the Lehman crisis, it has fallen again. Foreign demand, which accounted for 70% of orders, fell by 6.3% to 447.689 billion yen, a large drop. In particular, the world’s largest machine tool demand country, China, decreased by 8.8%, resulting in an overall decline. China’s demand for automobiles, aircraft, shipbuilding, and transportation machinery has fallen by 20%. Yokoyama Motohiko, president of the Japan Machine Tool Industry Association, stated that “the pace of investment in equipment has slowed slightly, and the highest level recorded in the past year has been adjusted back”.

The appreciation of the yen also has a certain impact. The Japan Machine Tool Industry Association stated that not only Europe, but also China, “appeared with the appreciation of the yen, the depreciation of the euro, orders are flowing to German companies,” and so on. According to Masano Makino, head of Makino's milling machine production division, "according to sales, it is estimated that there will be a 20% reduction."

Domestic domestic demand in Japan also decreased by 4% to 56.1 million yen. Although the number of automobiles increased year-on-year, electrical equipment and precision machinery have decreased by 20%. Whether or not 100 billion yen can be reached each month is a measure of how good the market is. It has exceeded this standard for five consecutive months since February. Because of this, the annual order amount still maintains the originally estimated 1.2 trillion yen.