BofA Japan FA Indicator: Ticks down but remains steady at high levels

Research evidence excerpt

BofA Japan FA Indicator: Ticks down but remains steady at high levels

Accessible version

Global Industrials

BofA Japan FA Indicator: Ticks down but

remains steady at high levels

Industry Overview

Indicator ticks down, but remains at high levels 17 July 2026

The BofA Japan Factory Automation (FA) Indicator, which leads the Japan Machine Tool Equity

Orders (JMTO) cycle by roughly three months, ticked down, but remains at high levels. Global

This suggests continued strength in YoY trends in JMTO over the next few months, Capital Goods

keeping us constructive on the FA cycle.

Breadth of positive leading inputs increase

In the latest data, the number of positive leading inputs increased from three to five,

with our input for the Global PMI, US Monetary Base, and Japan Industrials Earnings

Revisions turning positive. On the other hand, the input for auto turned negative.

Signals from the indicator support our core views on cycle

Our two core views on current FA cycle: 1) the cycle is transitioning from an early-cycle Kenjin Hotta >> Research Analyst

acceleration phase to a steadier mid-cycle phase; 2) this mid-cycle phase should extend BofAS Japan

well into 2027, supported by ongoing data-center-related capex. Recent signals from the +81kenjin.hotta@bofa.com3 6225 7786

BofA Japan FA Indicator are largely consistent with this outlook. While a further gradual Vivek Vasudeo

drop in the indicator over the next 1–2 months would reinforce our conviction, a sharp Data Science Rsch Analyst

deceleration would suggest a shorter mid-cycle phase than assumed in our base case. MLI+44 (UK)20 7995-3511

vivek.vasudeo@bofa.com

Exhibit 2: The indicator remains steady Yuri Nishizaki >>

BofA Japan FA Indicator vs. Japan machine tool orders (YoY%) Research Analyst

BofAS Japan