Japan's Core Machinery Orders Slide As Firms Grow Cautious

Japan's core private-sector machinery orders, a closely watched indicator of capital spending, slumped by a much bigger than expected 5.2% in March, official figures showed May 15.

Analysts said the drop suggested that the stronger yen and high oil prices were making companies less optimistic about the business outlook.

Year-on-year, core private-sector machinery orders, which exclude particularly volatile demand from electric utilities and for ships, were down 1.6% in March, the Cabinet Office said.

Total orders received by 280 manufacturers rose 1.5% month-on-month and were up 23.6% from a year earlier.

In the three months to March, core machinery orders declined 0.4% from the previous quarter while total orders rose by 7.4%.

Manufacturers are even less optimistic about the outlook, forecasting a drop of 2.5% in core private-sector orders in the April-June period from the previous quarter. Total orders are expected to decrease by 0.2%.

Copyright Agence France-Presse, 2006

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