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Japan's core machinery orders dive
By Tomoko A. Hosaka |
July 9, 2009, Thursday
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JAPAN'S core machinery orders, a closely watched indicator of corporate capital spending, unexpectedly fell for a third month in May as uncertain prospects for a global economic recovery kept companies guarded, the government said yesterday.
Core private sector machinery orders in Japan, which exclude volatile orders from electric power companies and ship builders, declined 3 percent from April to 668.2 billion yen (US$7.1 billion).
The result marked the lowest value on record since the government began compiling comparable data in April 1987.
Like its Asian neighbors, Japan was battered by the plunge in global demand triggered by the United States financial crisis last year. The country's marquee brands including Toyota and Sony have been among the hardest hit, posting massive losses, cutting jobs and slashing production.
Their aggressive moves have begun to pay off as they begin to replenish depleted stockpiles of cars and electronics. Machinery orders among manufacturers rose 5.4 percent in May, helped by significant gains among auto makers and general machinery companies.
The overall slump in May stems largely from non-manufacturers, whose managers remain wary of investing in new equipment. Orders from non-manufacturers, including mining, finance and transportation companies, fell 6.9 percent.
"Orders from manufacturers are finding firmer ground and in some industries have actually started to turn back up," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. "The concern remains the downtrend in orders from non-manufacturers, which are closely correlated with domestic demand."
A key central bank survey of corporate sentiment last week showed that Japanese companies sharply reduced their capital spending plans and expect to cut expenditures by an average 9.4 percent this fiscal year through March 2010.
A separate finance ministry report offered another dose of sobering data yesterday.
The current account surplus, which is Japan's broadest measure of trade with the rest of the world, tumbled 34.3 percent from a year earlier to 1.3 trillion yen as exports extended their losing streak to eight months.
Exports in May fell 42.2 percent to 3.76 trillion yen, while imports retreated 43.9 percent to 3.37 trillion yen. Japan's exports to North America and the European Union plunged about 45 percent.
Core private sector machinery orders in Japan, which exclude volatile orders from electric power companies and ship builders, declined 3 percent from April to 668.2 billion yen (US$7.1 billion).
The result marked the lowest value on record since the government began compiling comparable data in April 1987.
Like its Asian neighbors, Japan was battered by the plunge in global demand triggered by the United States financial crisis last year. The country's marquee brands including Toyota and Sony have been among the hardest hit, posting massive losses, cutting jobs and slashing production.
Their aggressive moves have begun to pay off as they begin to replenish depleted stockpiles of cars and electronics. Machinery orders among manufacturers rose 5.4 percent in May, helped by significant gains among auto makers and general machinery companies.
The overall slump in May stems largely from non-manufacturers, whose managers remain wary of investing in new equipment. Orders from non-manufacturers, including mining, finance and transportation companies, fell 6.9 percent.
"Orders from manufacturers are finding firmer ground and in some industries have actually started to turn back up," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. "The concern remains the downtrend in orders from non-manufacturers, which are closely correlated with domestic demand."
A key central bank survey of corporate sentiment last week showed that Japanese companies sharply reduced their capital spending plans and expect to cut expenditures by an average 9.4 percent this fiscal year through March 2010.
A separate finance ministry report offered another dose of sobering data yesterday.
The current account surplus, which is Japan's broadest measure of trade with the rest of the world, tumbled 34.3 percent from a year earlier to 1.3 trillion yen as exports extended their losing streak to eight months.
Exports in May fell 42.2 percent to 3.76 trillion yen, while imports retreated 43.9 percent to 3.37 trillion yen. Japan's exports to North America and the European Union plunged about 45 percent.
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