Japan's Machinery Orders Weaker-Than-Expected

A 6.7% rise in orders dashes hopes of a double-digit rebound.

Japan reported Oct. 10 a 6.7% rise in private-sector core machinery orders in August, dashing hopes of a double-digit rebound after the biggest fall for almost two decades in July. Year-on-year, core private orders, which exclude particularly volatile demand from electric utilities and for ships, were down 0.5% by value, the Cabinet Office said.

Machinery orders placed by the manufacturing sector rose 9.3% month-on-month while those from non-manufacturers gained 5%. Total orders received by 280 manufacturers operating in Japan rose by 12% month-on-month.

Spending by companies on plant and equipment plays a key role in Japan's economic recovery and the figures are closely watched by investors, although orders tend to fluctuate sharply from month-to-month.

"Taking into account the fact that machinery orders slumped in July, the recovery was very weak," said Kota Hirayama, an economist at Nomura Securities Financial and Economic Research Center.

Foreign orders jumped 29.1% in August from July while public-sector orders were down 4.4%.

Copyright Agence France-Presse, 2006

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