Japan's machinery orders log fastest fall in July-Sept. quarter+

TOKYO, Nov. 10 Kyodo - Japan's core private-sector machinery orders dropped 10.4 percent in the three months through September from the previous quarter, matching the largest decline on record set a decade ago, adding to signs that corporate capital spending has been weakening as the nation's economy has slowed, the government said Monday.

The core orders, excluding those for ships and from electric power companies,
which tend to vary widely, stood at 2.88 trillion yen. The decline in the
second quarter of fiscal 2008 matched the 10.4 percent fall marked in the
April-June period of 1998, the sharpest fall among comparable data since April
1987, the Cabinet Office said.
The July-September decline was far larger than the government's earlier
projection of a 3.0 percent decrease.
A drop in orders from the shipping industry contributed the most to the overall
decline, the first in five quarters. Orders from the transportation, machinery
and telecommunications industries also marked major falls in the reporting
quarter.
''It became evident that the recovery in private-sector orders had stalled,''
Yasukazu Shimizu, senior economist at Mizuho Securities Co., wrote in a report.
''Market participants are now focusing on how fast orders will decline and how
long the downward trend will continue.''
Orders from manufacturers fell 10.9 percent to 1.29 trillion yen while those
from nonmanufacturers were down 12.0 percent to 1.58 trillion yen.
Orders from the public sector lost 10.1 percent to 665.3 billion yen.
Demand from overseas, which indicates the strength of Japanese exports, dropped
7.3 percent to 3.09 trillion yen, recording the biggest quarterly fall since
the October-December period of 2005 when it slid 9.5 percent.
On outlook, the office forecasts the core orders will improve in the current
quarter through December, expecting a 1.2 percent increase. But it predicts
Japan's machinery orders will generally remain on a downward trend as the
economy has been slowing, largely affected by the global economic slowdown
against the background of the worldwide financial turmoil.
In order to achieve the targeted 1.2 percent growth in the October-December
quarter, the office said, the orders must continue to record at least a 1.5
percent rise in each of the months.
The government said in its basic assessment on machinery orders for September
that they have been ''decreasing,'' using the word for the second straight
month.
In September alone, core machinery orders rose a seasonally adjusted 5.5
percent from the previous month to 940.7 billion yen for the first increase in
four months, making a remarkable turn from the 14.5 percent fall in August.
The reading, widely regarded as a key indicator of corporate capital spending
some six months ahead, was well above the average market forecast of a 2.7
percent increase in a Kyodo News survey.
On a year-on-year basis, the orders represented an unadjusted 4.2 percent fall,
the office said.
Orders from manufacturers gained a seasonally adjusted 9.7 percent from August
to 433.7 billion yen while those from nonmanufacturers shed 1.3 percent to
494.3 billion yen.
Orders for such products as semiconductor-manufacturing devises and turbines
for thermal and hydraulic power generation led the monthly advance, the Cabinet
Office said.
The office examined orders received by 280 major machinery makers in Japan.