Global Industrials: BofA Japan FA Indicator: Modest improvement

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Global Industrials: BofA Japan FA Indicator: Modest improvement

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Global Industrials

BofA Japan FA Indicator: Modest

improvement

Industry Overview

19 May 2026

Indicator ticks up Equity

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

Orders (JMTO) cycle by roughly three months, ticked up last month. The indicator Capital Goods

remains at relatively elevated levels, suggesting continued strength in JMTO in the near

term. However, we are monitoring developments closely, as the recovery to date has

been relatively narrow in terms of underlying drivers, and potential risks stemming from

the Middle East conflict could weigh on trends heading into 2H 2026. However, for now,

we remain constructive on the FA cycle outlook for 2026.

Breadth of positive leading inputs declines

The modest improvement in the indicator was primarily driven by growth-sensitive asset

prices. That said, the number of positive leading inputs declined from five to four, with Kenjin Hotta >>

the Global PMI turning negative and pointing to a softer momentum. Meanwhile, our ResearchBofAS JapanAnalyst

semiconductor production machinery input – used as a coincident indicator – turned +81 3 6225 7786

kenjin.hotta@bofa.com

positive after remaining negative for much of the past year. We believe this shift helps

Vivek Vasudeo

explain the recent surge in semiconductor-related FA orders. In the absence of a broader Data Science Rsch Analyst

recovery, we continue to regard stocks with relatively high exposure to semis as MLI (UK)

+44 20 7995-3511

attractive. vivek.vasudeo@bofa.com

Yuri Nishizaki >>

Exhibit 2: The indicator shows an uptick Research Analyst

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

yuri.nishizaki@bofa.com