Japan's machine tool orders continued to grow strongly in May, supported by robust demand from both overseas and domestic customers.
Japan's machine tool orders rose 37.4% year over year to 176.8 billion yen, according to data released Tuesday by the Japan Machine Tool Builders' Association.
The increase followed a 45.1% rise in April and was slightly stronger than the 37% growth expected by economists surveyed by Trading Economics.
Foreign orders climbed 37.7% from a year earlier to 131.8 billion yen, while domestic demand increased 36.4% to 45 billion yen.
The strong growth in orders comes as Japanese machine tool makers expand their U.S. operations to capture expected demand from the Trump administration's push to revive domestic manufacturing, Nikkei reported.
Japan and Germany are leading suppliers to U.S. manufacturers in sectors such as aerospace and medical equipment, where precision machining is critical.
The U.S. imports about 900 billion yen of machine tools annually, with Japan providing nearly 30% of the total, the largest share among foreign suppliers.
According to Nikkei, Okuma invested about 4 billion yen in a new repair center in North Carolina that is scheduled to begin operations in June.
DMG Mori also plans to triple U.S. output in 2026 from 2024 levels and has shifted production of some machining centers and lathes from Japan to its Davis, California, facility, while continuing to manufacture more advanced equipment in Japan and Germany for export.
Machine tools were among the products affected by U.S. tariffs on steel and aluminum imports in 2025, while additional sector-specific duties remain under consideration.
Although the U.S. Supreme Court later ruled that the "reciprocal" tariffs on machine tools were unconstitutional, President Donald Trump has indicated that his administration intends to pursue tariffs through alternative measures.
The industry is also keeping a close watch on supplies of thinners and cutting oils, key materials used in the production of products ranging from semiconductors and automobiles to aircraft.
Shigetomo Sakamoto, president of Shibaura Machine and chairman of the Japan Machine Tool Builders' Association, said a prolonged conflict in the Middle East and any effective closure of the Strait of Hormuz could eventually disrupt supplies.
While inventories remain adequate for now, "we are closely monitoring the situation," Sakamoto said.
Multiple Japanese petrochemical companies have announced production cuts in recent days amid fears that the conflict in the Middle East could tighten supplies of naphtha, a key feedstock used to manufacture plastics and a wide range of industrial products.
The production curbs have raised concerns about broader impacts on industries ranging from consumer goods and construction materials to electronics and technology.
"Markets are not really thinking through the cascading implications of no naphtha supply," Mateen Chaudhry, founder and managing director of corporate advisory firm BCMG, was quoted as saying by Bloomberg News.
"It might be the canary in the coal mine, and unfortunately Japan is very exposed," he added.
Sakamoto said the industry group would work closely with Japan's Ministry of Economy, Trade, and Industry to monitor supply conditions and ensure any shortages do not become a bottleneck for manufacturing activity.
