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Japan machinery orders post first rise in 3 months as overseas demand drives recovery

By: Tomoko A. Hosaka, THE ASSOCIATED PRESS

10/02/2010 12:44 AM | Comments: 0

TOKYO - Japanese machinery orders, a closely watched indicator of future business investment, rose in December for the first time in three months, the government said Wednesday.

Core machinery orders surpassed expectations, jumping 20.1 per cent from the previous month to 751.2 billion yen ($8.4 billion), according to the Cabinet Office report. The figure excludes often volatile numbers from shipbuilders and electric power companies.

Kyodo News agency had forecast an 8.2 per cent increase to follow November's 11.3 per cent decline to a record low.

The results reflect how robust overseas demand, particularly in Asia, is underpinning Japan's economic recovery.

Exports in December rose for the first time since the collapse of Lehman Brothers in late 2008, powering industrial production up 2.2 per cent from the previous month.

Gross domestic product figures due Monday will likely show that growth in the world's second biggest economy accelerated last quarter.

Strong sales in emerging markets like China helped Nissan Motor Co. book a profit in the October-December quarter. The automaker on Tuesday revised up its annual outlook as a result and now expects to be in the black for the fiscal year through March 31.

The domestic economy, however, continues to struggle. Rattled by deepening deflation and falling wages, businesses remain cautious about spending.

Goldman Sachs economist Chiwoong Lee said he does not expect corporate capital expenditure this year to rebound completely from their deep 2009 slump.

"The continuing weakness of domestic demand leaves capex heavily dependent on export sectors for a full recovery," he said in a note to clients.

Orders from manufacturers climbed 17.1 per cent, while those from non-manufacturers expanded 22.9 per cent. Overseas orders rose 20.9 per cent.

Overall orders received by 280 Japanese manufacturers increased by 21.2 per cent, thanks to precision instrument companies and iron and steel makers.

Core orders rose 0.5 per cent for the October-December quarter but tumbled 26.9 per cent for the 2009 calendar year - the sharpest full-year decline ever recorded.

The Cabinet Office predicts that in the January-March quarter, orders will expand 2 per cent from the previous quarter.

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