Japan machinery orders fall for 2nd month

[December 08, 2010]  TOKYO (AP) -- Japan's machinery orders, a closely watched gauge of future business investment, fell for the second straight month as businesses stayed cautious about spending.

Japan's core private sector machinery orders fell 1.4 percent to 745.7 billion yen ($8.9 billion), the Cabinet Office said Wednesday. The result marks the second straight month of decline and undershoots Kyodo News agency's average forecast for a 0.4 percent fall.

The figure excludes volatile numbers from shipbuilders and electric power companies.

Japanese companies are grappling with a strong yen and uncertainties about the global economy. Slower growth in key overseas markets has cooled export demand, and recent government figures point toward meager economic growth, or even a contraction, this quarter.

The recovery in capital expenditures continues to be sluggish, said Goldman Sachs economist Chiwoong Lee.

"Growth is currently slowing for exports and consumer durables, which have been underpinning the economic recovery," he said in a commentary for clients. "Negatives for capex include declining profits at exporters due to the strong yen, production shift overseas and the expiry of government subsidies."

Orders from manufacturers rose 1.4 percent thanks to higher demand from the non-ferrous metal and oil sectors. Those from non-manufacturers, however, retreated 8.7 percent.

Overseas orders, an indicator of prospects for Japanese exports, rose 16 percent.

The Cabinet Office maintained its overall assessment, saying machinery orders were "picking up."

But Takashi Wada, an official in the Cabinet Office, warned that clouds loom, according to Kyodo.

"Although we maintained the assessment that says they are 'picking up,' it is not that we are seeing bright prospects," he was quoted as saying.

[Associated Press]

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