Core Japanese machinery orders plunge in deepening recession+

TOKYO, Feb. 9 Kyodo -
Core Japanese private-sector machinery orders declined 6.0 percent in 2008 for
the second straight yearly fall amid the deepening recession, with those in the
October-December quarter plunging 16.7 percent from a year earlier, the biggest
fall since April 1987, the government said Monday.
Core machinery orders, a key indicator of corporate capital spending about six
months ahead, have been ''drastically decreasing,'' the Cabinet Office said,
using the expression for a second straight month.
In 2008, core orders totaled 11,602.2 billion yen.
Machinery orders dropped sharply in the second half of 2008, giving evidence
that Japanese companies have been putting off investment while cutting workers
and production since the September collapse of Lehman Brothers Holdings Inc.,
economists said.
In December alone, core orders fell 1.7 percent from the previous month to a
total of 741.6 billion yen, the lowest level since July 1987.
The fall in December was smaller than the average market forecast of an 8.7
percent decline in a Kyodo News survey but followed a 16.2 percent slide in
November and a 4.4 percent drop in October, signaling the severity of the
current economic slowdown and its impact in Japanese companies' capital
investments.
Core orders exclude those for ships and by electric power companies as they
tend to vary widely due to their large size.
In December, machinery orders from manufacturers rose 7.0 percent from the
previous month to 303.3 billion yen due mainly to a jump in orders from
steelmakers.
But a Cabinet Office official said the increase ''may have been boosted by an
extraordinary factor'' and there are few signs to be optimistic about the
future course of the capital spending trend. He pointed out that orders from
electric machinery makers and automakers continued to decline in December.
Orders from nonmanufacturers fell 8.3 percent to 445.1 billion yen.
Foreign orders rose 27.6 percent from the previous month to 753.9 billion yen
for the first increase in three months.
''Machinery orders seem to have fallen to as low a level as they can go for the
time being,'' said Etsuko Yamashita, chief economist at Sumitomo Mitsui
Banking, but added it is necessary to monitor the data over the next three
months.
The Cabinet Office said core machinery orders in the first three months of 2009
are likely to post a 4.1 percent increase from the previous quarter.
Yamashita also sees a pick up in the January-March period but said it is
because of the sharp falls in the preceding months.
The Cabinet Office examines orders received by 280 machinery makers in Japan.
==Kyodo
2009-02-09 20:54:11