Cabinet Office, Government of Japan

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Explanation of Machinery Orders

1. Purpose of the Survey

To research the state of the order books of machinery manufacturers, and to collect basic material for analyzing the direction of the economy through an early understanding of trends in capital investment in machinery.

2. Areas Covered by the Survey

280 manufacturers in the major machinery sectors were selected to examine more than 80% coverage of the total sector when split into the major fields of industrial machinery indicated in Item 5 below. The data are, as of 1985; the survey of these 280 companies began in April, 1987.

3. Coverage

Totals are the simple sum of reported figures, and not population estimates. The ratio of the amount of 'sales' in Machinery Orders to the amount of the 'shipment' in Machinery Statistics(METI) is calculated to refer the total coverage. The ratio has recently hovered at approximately 90%.

4. Survey Items and Chapter of Table Items

  1. Value of orders received by type of machinery and user
    This is surveyed by type of machinery and user.
    The users are:
    Private-sector(Manufacturing and Non-manufacturing)
    Governments(Transport, Ministry of Defence, National Government, Local Governments and Others)
    From overseas
    Through agencies
    Total
  2. Sales total and orders in hand by type of machinery

    These are surveyed by type of machinery(not surveyed by type of user).

  3. Chapter of table item in statistical table
    Historical Data
    Machinery Orders by Sectors (seasonally adjusted and original series)
    Reserved period (seasonally adjusted)
    Machinery Orders by Machinery Classification (original series)
    Sales by Machinery Classification (original series)
    Orders in hand by Machinery Classification (original series)
    Tables by Sectors and Machinery Classification(original series)

5. Types of Machinery in the Survey

Types of machinery are; engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships and watercrafts.There are sub types in engines and turbines, heavy electrical machinery, electronic and communications equipment and industrial machinery. Parts, repair works, and related installation works are included. Steel structures, bearings, wires and cables are also surveyed (these are not included in Machinery Orders by users).

The classification of machinery is broadly in line with that of the Japan Standard Commodity Classification.
"Mobile phone" that had been included in "communication equipment" has excluded from this survey since April 2011.

6. Definition of Users

For the purposes of the survey, users are defined as those businesses that have outstanding orders (i.e. hold contracts) directly with the manufacturers surveyed. However, when agencies (including trading houses), construction companies, and goods leasing businesses are involved, the user shall be the party who will actually use the machinery. Or, if the final user is unclear, the order will be regarded as arising from an agency, construction company, or goods leasing business. When the type of machinery is identified as being ultimately destined for export, the machinery will be designated as "ordered from overseas, " even if it is a re-order from a domestic business. When the user is operating in two or more types of business, they will be classified according to the type of business conducted by the office ordering the machinery in question. In cases where classification is difficult, they will be classified in accordance with whatever their main line of business is.

The industrial classifications of users are broadly in line with those of the Japan Standard Industrial Classification.

7. Consumption Tax

Figures in the survey do not include the consumption tax introduced on April 1, 1989.

8. Outsourcing, Subcontracting and Changes to Order Value

Even if the contractor outsources or subcontracts part of the order to a third party, the amount of the order will be regarded as being wholly that of the contractor. When orders reported are subject to cancellation, price reduction, or increase, the value will be recalculated for the month in which such alterations occurred. In the case of figures being heavily downgraded, a minus sign (-) may be indicated.

9. In-house Consumption and In-house Use

To avoid duplication, orders have not been accounted for machinery that will be expended within the company as components(for instance, the engine of ship made by the shipbuilding company and it installs it in a ship). However, it includes machinery that will be used in-house as manufacturing facilities(for instance, the crane to make by the shipbuilding company and uses it) is accounted for.

10. Sales Total and Orders in Hand

Sales totals are in principal the reported sales totals, but may also be the value of shipment or finished products. Depending on the state of the surveyed companies, the value of orders in hands may not necessarily match the balance between the value of orders and sales totals.

11. Survey Method

The surveyed companies complete the survey forms by themselves. Distribution and collection of the survey forms are conducted by the Cabinet Office via post and online. The Cabinet Office also undertakes the checking and tabulation of the survey forms.

12. Notes on Using the Survey Results

  1. Using the statistic sheets
    Order values are reported in monthly, even if they are very large and takes several months to build. It makes the values of these statistics volatile and it may sometimes take time to establish basic trend.
  2. Private-sector machinery orders, excluding volatile ones for ships and electric power companies
    Because orders for electric power and ships and watercrafts are not remotely related to the state of the economy the figures involved are large and erratic, and it takes a long time to finish the production, they are sometimes regarded as being unsuitable in ascertaining the direction of autonomous capital investments over two or three quarterly financial periods. To redress this, the "private-sector machinery orders, excluding volatile ones for ships and electric power companies" category has been calculated. "Ships" refers to machines, and "electric power" to users thereof.
  3. Seasonal adjustments
    While the seasonal adjustments in the survey are basically made using the Census Bureau methodX-11 of X-12-ARIMA (The lower and upper sigma limits used to downweigh extreme irregular values are 2.0 and 3.0, respectively. In other parameters, standard values are used.), the RegARIMA functions were examined, and applied for series of main sectors.
  4. Revision of seasonal adjustments
    The seasonal adjustments are revised annually in January and are the past value revised then. Until next revision, seasonal adjustments are made by the prediction index.

13. Modifications in the Industrial Classifications

The industrial classifications of users in the survey have been modified since the January 2016 publication. The industrial classifications of users in the survey have been modified since the April 2011 publication.

Contact

Cabinet Office, Government of JapanEconomic and Social Research Institute
1-6-1 Nagata-cho, Chiyoda-ku, Tokyo 100-8914, Japan.