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August 11, 2009

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Home » Business » Economy

Japan's struggling economy shows more signs of recovery

JAPAN'S core machinery orders, a closely watched indicator of corporate capital spending, jumped in June for the first time in four months, the government said yesterday.

Core private sector machinery orders in June surged 9.7 percent from a month earlier to 732.8 billion yen (US$7.5 billion), according to the Cabinet Office report. The figure excludes often volatile orders from shipbuilders and electric power firms.

The result offers further evidence of an emerging recovery for the world's No. 2 economy, marking a major improvement from a 3 percent decline recorded in May. It also beat a 3.1 percent rise forecast in a Kyodo news agency market survey.

But Yuichiro Nagai, an economist at Barclays Capital in Tokyo, cautioned against getting too excited about the latest numbers.

June's sharp rise stems in large part from a big one-time jump in orders from the nonferrous metals industry. Excluding this factor, core orders were generally in line with forecasts, he said.

Large gains from steel makers and transport equipment companies also contributed to June's jump.

An uptick in global demand, particularly from China, has breathed some life back into Japanese manufacturers recently. Factory output rose 2.4 percent in June for the fourth monthly climb.

Government incentives have boosted sales of fuel-efficient cars like Toyota's Prius, which helped the world's top auto maker deliver a smaller-than-expected quarterly loss and narrow its forecast of red ink for the full year.

A separate finance ministry report yesterday provided more encouraging news.

The current account surplus, Japan's broadest measure of trade with the rest of the world, rose 144 percent in June from a year earlier to 1.15 trillion yen. It was the first increase in nine months, helped by easing export declines.

Exports in June fell 37 percent to 4.3 trillion yen, while imports retreated 43.8 percent to 3.7 trillion yen.

In the April-June period, core machinery orders fell 4.9 percent from the previous quarter.

The government expects the figure to tumble 8.6 percent in July-September.


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