Japanese machinery orders see sharp fall in May

| July 8, 2010 | 0 Comments

Japanese core private-sector machinery orders - a highly volatile series seen as an indicator of corporate spending - fell more than expected in May, according to figures published today.

Official figures revealed machinery orders fell by 9.1% in May compared with the previous month - the steepest fall since August 2008 - as companies held back on business investment.

The fall was far steeper than the 3% forecast by analysts.

According to Norio Miyagawa, economist at Mizuho Securities Research & Consulting: “Firms are not likely to add to their business investment actively in the near term as there is still the risk that (Japan’s) economic growth will be hampered due to a possible slowdown in overseas economies.”

In other news for the world’s second largest economy, last week the Bank of Japan’s closely watched quarterly Tankan survey revealed a significant improvement in business confidence in Japan.

The Tankan index revealed business confidence among major manufacturers had picked up for the fifth consecutive quarter, rising one point in June from -14 in March.

The Tankan, which surveys 10,000 firms, measures the percentage of companies that think business conditions are good, minus those that believe they are bad.

The Japanese economy was one of the first to emerge from recession – in the second quarter of last year. The recovery has been driven by exports but recent figures suggest the domestic picture remains weak.

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