Japan Machinery Orders Slump More than Expected

Adds to jitters about the economy

Japan's core machinery orders tumbled by much more than expected in September, official figures showed Nov. 8, adding to jitters about the health of Asia's largest economy. Japan's economy has been steadily recovering from recession in the 1990s but there are concerns about the impact of slowing U.S. growth and tough conditions facing small companies in particular.

Core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, fell by 7.6% in September from the previous month, the government said.

Machinery orders were 2.5% higher in the third quarter than in the second and are forecast to rise 3.1% in the fourth quarter.

"Today's data seem to suggest that worries about the subprime loan problems have not weakened corporate Japan's capital investment," said Mamoru Yamazaki, chief economist of RBS Securities. But Yamazaki said the latest machinery orders suggested that capital spending would continue to serve as a key growth driver in Japan.

Copyright Agence France-Presse, 2007

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