Japan machinery orders drop amid recovery doubts
Japan's machinery orders drop 5.4 percent in April to 22-year low amid recovery
doubts.
TOKYO (AP) -- Japan's core machinery orders, a closely watched indicator of
corporate capital spending, tumbled to a 22-year low in April as uncertainty
about an economic recovery kept companies cautious.
Core private sector machinery orders, which exclude volatile orders from
electric power companies and shipbuilders, fell 5.4 percent from March to 688.8
billion yen ($7.1 billion), the government said Wednesday. The result marked
the lowest value since April 1987 and suggests that companies aren't convinced
a recovery is emerging.
The data surprised analysts, who had been expecting an average 0.6 percent
rise, according to a Kyodo news agency survey.
"Companies are very reluctant to spend as they have yet to see signs showing
the economy has bottomed," said Tetsuya Igarashi, an official in the Cabinet
Office, which released the data.
Like its Asian neighbors, Japan has been pummeled by the plunge in global
demand triggered by the U.S. financial crisis last year. The country's famous
brands including Toyota and Sony have been among the hardest hit, posting
massive losses, cutting jobs and slashing production.
April's 5.4 percent fall was the steepest decline since November, when
machinery orders dropped 12.2 percent, the government said. Orders also fell
for the second consecutive month.
Machinery orders in the manufacturing sector dropped 9.4 percent
month-on-month, while those among non-manufacturers fell 8.8 percent.
Recent glimmers of hope, however, point toward an economic uptick later this
year. The fall in exports looks to have bottomed, and economists predict
capital expenditures to begin recovering in the second half.
Even in the latest machinery orders data, key sectors for the world's
second-biggest economy posted gains. Orders from the auto industry rose 10.5
percent, while those from the electronics sector jumped 15.6 percent in April.
But it's not the manufacturers that worries Kyohei Morita, chief economist at
Barclays Capital in Tokyo.
"While the Japanese economy is now heading toward a moderate recovery led by
manufacturers and foreign demand, non-manufacturers -- who are closely tied to
domestic demand -- look like they will continue to lag behind for now," Morita
said in a note to clients.
Others caution against getting too excited about any bounce in machinery orders
in the coming months, since a rise is bound to look big compared to April's
numbers.
The Cabinet Office said Japan's core machinery orders from April to June would
fall by 5 percent from the January-March quarter.
AP Writer Shino Yuasa contributed to this report
