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December 11, 2009

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Home » Business » Manufacturing

Japanese machinery orders decline 4.5%

JAPANESE machinery orders, a closely watched indicator of corporate capital spending, lost steam in October as companies reigned in spending amid mounting economic recovery doubts.

Core machinery orders tumbled 4.5 percent in October from a month earlier, the government said yesterday. The figure excludes orders from shipbuilders and electric power companies, which tend to fluctuate more.

The result was worse than Kyodo news agency's forecast for a 4.3 percent decline.

Orders received by 280 core manufacturers that the Cabinet Office polls totaled 704.5 billion yen (US$8 billion) for the month, versus 738 billion yen in September.

October's fall follows a robust 10.5 percent jump in September, which seemed to point toward growing corporate confidence.

Since then, however, deflation has intensified and the yen has strengthened against the US dollar. Compounding worries are questions about the future of exports as the effect of global stimulus measures wanes.

The government shocked investors and economists on Wednesday with a sharp downward revision of third quarter gross domestic product. It now says the world's second-biggest economy grew at an annual pace of just 1.3 percent, compared with 4.8 percent in its preliminary estimate.

The correction stems from a misreading of capital investment - spending by companies on equipment, factories and other assets - which fell 2.8 percent from the second quarter.


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