Japan's Machinery Orders Rise By Less Than Expected

Japanese private-sector core machinery orders, a key gauge of corporate capital spending, rose by a smaller-than-expected 2.8% in October from September, official figures showed Dec. 8. Market forecasts had been for an increase of about 5.7% after September's unexpected 7.4% slump.

Year-on-year, core private orders, which exclude particularly volatile demand from electric utilities and for ships, were down 1.2% by value, the Cabinet Office said.

Machinery orders from manufacturers declined 10% month-on-month in October while those placed by non-manufacturers were up 10.9%. Public sector orders were down 6.4% while foreign orders jumped 36.8%.

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

Earlier Dec. 8, the government downgraded its estimate for third-quarter gross domestic product growth partly because of weaker-than-expected corporate capital investment. The economy grew by just 0.2% in the three months to September from the previous quarter, down from an initial estimate of 0.5% and the second quarter's 0.3% gain, the Cabinet Office said.

Asia's largest economy grew by 0.8% on an annualized basis in the third quarter, also much slower than the 2% preliminary estimate.

Copyright Agence France-Presse, 2006