By Keiko Ujikane March 10 (Bloomberg) — Japanese machinery orders fell in January, a sign that any pickup in capital spending is likely to be slow. Orders, an indicator of business investment in three to six months, declined 3.7 percent from December when they increased 20.1 percent, the most since August 2000, the Cabinet Office said today in Tokyo. The median estimate of 27 economists surveyed by Bloomberg was for a 3.5 percent drop. Business spending remains the weak link of an economic recovery that has begun to spread from exporters to households. The government is likely to revise economic growth figures lower tomorrow after a report last week showed capital investment fell for an 11th straight quarter. The decline in orders “is payback from the large gain in December and they may gradually recover in the coming months,” Junko Nishioka , chief economist at RBS Securities Japan Ltd. in Tokyo, said before today’s report. “But the level of orders remains low, signaling companies remain cautious about capital spending.” A separate report showed producer prices fell 1.5 percent in February from a year earlier, the 14th consecutive drop, matching the median estimate of economists. The yen traded at 90.01 per dollar at 8:59 a.m. in Tokyo, from 90 before the reports were published. Revised GDP Spending on plant and equipment fell 18.5 percent in the fourth quarter from a year earlier, the Finance Ministry said last week. Gross domestic product grew at an annual 4 percent pace in the three months ended Dec. 31, slower than the 4.6 percent reported last month, according to the median forecast of 29 economists surveyed ahead of tomorrow’s revised figures. Companies including Panasonic Corp. are paring costs to protect profits. The world’s largest maker of plasma televisions may make its money-losing TV operations profitable in the year ending March 2011, helped by cost reductions and sales of 3-D sets, President Fumio Ohtsubo said last week. The Osaka-based company cut costs by 259 billion yen ($2.9 billion) in the nine months ended Dec. 31. Other data for January signal Japan’s recovery from its worst postwar recession remains intact. The unemployment rate dropped to a 10-month low of 4.9 percent and wages climbed for the first time in 20 months. Manufacturers increased output at a faster pace and exports climbed the most in almost 30 years, Hitachi Excavators Hitachi Construction Machinery Co. , Asia’s second-largest excavator maker, may double sales in China this quarter as spending on railroads and mining spurs demand, Chief Executive Officer Michijiro Kikawa said this month. “The manufacturing sector will continue to recover on a pickup in exports,” said Shunsuke Saito , an economist at Dai- Ichi Life Research in Tokyo. “So there’s a high chance that companies will have a better appetite for investment.” The Cabinet Office forecast last month that factory orders will increase 2 percent in the first quarter. Orders rose 0.5 percent in the three months ended Dec. 31, the first gain in seven quarters. To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net ;
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Japan’s Machinery Orders Fall 3.7%; Business Spending Revival May Be Slow
