Japan Machinery Orders Slip Again, Darkening Outlook

Orders by manufacturers tumbled 10.4% in July.

For the second month in a row, Japanese orders for machinery dropped, government data showed on Sept. 11, raising further concern about the outlook for the world's second largest economy. Orders fell 3.9% in July from the previous month, the Cabinet Office said, following a 2.6% fall in June.

Orders by manufacturers, such as machinery makers that buy engines and tools, tumbled 10.4% in July.

Core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, are regarded as a leading indicator of corporate capital spending.

"Demand overseas keeps falling, and considering the current economic situation, the trend (in machinery orders) is likely to continue," said Kyohei Morita, chief Japan economist at Barclays Capital.

Orders by manufacturers, such as machinery makers that buy engines and tools, tumbled 10.4% in July.

Machinery orders from non-manufacturers such as farmers and telecommunication firms were down 2.4%.

Many economists suspect that Japan's economy, Asia's largest, may have slipped into recession after some six years of almost continuous growth. A global economic slowdown, coupled with higher commodity prices, has hit the Japanese economy, which has long relied on exports of finished goods made from imported raw materials.

Japan also saw bleak data on Sept. 10, with the current account surplus falling on rising energy costs and wholesale prices growing at their fastest pace in 27 years.

Copyright Agence France-Presse, 2008

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