Japanese manufacturers pessimistic but machinery orders rise

| August 10, 2009 | 0 Comments

Figures show that Japanese core machinery orders (a highly volatile series seen as an indicator of corporate spending) rose 9.7% in June compared with the previous month.

The rise represents the biggest gain in four months and was more than treble the 2.9% analysts had forecast.

However, despite the positive data, a survey of manufacturers suggested a pessimistic outlook ahead.

The survey, conducted by the Cabinet Office, showed that manufacturers expect orders to fall in the July to September period compared with the previous three months.

Yasukazu Shimizu, an economist at Mizuho Securities, comments: “A recovery in capital spending won’t be assured unless production picks up in a lasting way, which depends largely on how final demand in the Western markets recovers.”

Today’s figures may come as a blow to the Bank of Japan, who recently said it was optimistic for the future.

The Bank expects the economy to begin its recovery in the latter half of 2009. In a statement, the Bank of Japan said: “Japan’s economic conditions have stopped worsening. Public investment is increasing and exports and production are picking up. Business sentiment, especially of large manufacturing firms, has stopped deteriorating.”

Meanwhile, the Bank has revised its forecast for the next financial year, predicting positive growth of 1.0%, revised from its earlier projection of 1.2%.

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