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Japanese machinery orders slid 9.3%

(Agencies)
Updated: 2009-09-10 16:24

A man looks at an electronic board displaying news and share prices outside a brokerage in Tokyo September 9, 2009. [Agencies]

TOKYO: Japanese machinery orders, a closely watched indicator of corporate capital spending, fell back in July after rising the previous month, the government said Thursday, suggesting the outlook for the world's No.2 economy remains murky.

Core private sector machinery orders plunged 9.3 percent from a month earlier to 664.7 billion yen ($7.3 billion), according to the Cabinet Office report. It was the lowest level since the government started compiling data in 1987, a Cabinet Office official Tetsuya Igarashi said. The "core" figure excludes often-volatile orders from shipbuilders and electric power companies.

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Declines in orders at manufacturers, including steelmakers and transport equipment companies, contributed to the fall.

The biggest drop came from nonferrous metal industry, whose investment in equipment for nuclear power plants in June triggered a temporary jump in that month, Igarashi said.

The drop was a big turnaround from the 9.7 percent jump recorded in June -- the first increase in four months. It was also a larger decline than the 3.6 percent fall forecast in a Kyodo News agency market survey.

"Domestic demand has not yet reached a state of recovery," Igarashi said.

In the April-June quarter, core machinery orders fell 4.9 percent from the previous quarter. The government expects the figure to tumble 8.6 percent in the July-September period.

Japan's economy remains week, with unemployment rising to a record 5.7 percent and industrial production still at more than 22 percent lower than it was a year ago, just before the global financial crisis broke out. Retail sales have fallen for 11 straight months, as consumers spend less amid economic anxieties.

But some upbeat results are emerging.

The country's factory output rose for the fifth straight month in July, lifted by a rebound in exports as governments around the world infused their economies with stimulus money, and was expected to keep climbing.

Last month, the government said Japan's economy expanded at an annual pace of 3.7 percent in the second quarter, climbing out of a yearlong recession.