Domestic wholesale prices fell 1% in fiscal ’99

Japan’s domestic wholesale prices fell 1 percent in fiscal 1999 from the year before, following a 2.1 percent drop in fiscal 1998, the Bank of Japan said Monday.

The domestic wholesale price index for fiscal 1999, which ended March 31, came to 96 against a base of 100 for 1995, the central bank said.

The figure shows Japan continued to face deflationary pressure, with the WPI effectively declining for the eighth consecutive year when discounting the impact of the 1997 consumption tax hike that raised prices 1 percent in fiscal 1997.

Of the 21 items covered by the statistics, 17 posted price falls, with mineral products, scrap and waste as well as nonferrous metals dropping more than 4 percent.

Electrical machinery, which accounted for the largest slice of domestic wholesale sales with 15.4 percent, posted a price decline of 3.1 percent.

But prices of petroleum and coal products rose 7.7 percent due to higher crude oil prices. ,after declining 7.5 percent in the previous year. For March alone, the WPI stayed unchanged from the previous month at 96.1, but was up 0.1 percent from a year earlier for the first upturn since February 1998.

Machine orders drop

Japan’s key private-sector machinery orders in February dropped a seasonally adjusted 2.5 percent from the previous month, marking the first fall in three months, the Economic Planning Agency said Monday.

The machinery orders, which exclude volatile orders for ships and from power companies, totaled 967.4 billion yen.

The orders are seen as a leading indicator of corporate spending on plant and equipment six to nine months in advance.

Compared with the previous year, such orders rose 12.8 percent. Although core machinery orders fell from January, Yoshihiko Senoo, chief of the EPA’s Business Statistics Research Division, said the level of the orders was still high due to increases of 16.1 percent in December and 0.8 percent in January.

The EPA projects the core machinery orders to show a 1.6 percent fall in the January-March period from the previous quarter.

Senoo said the projection will only be realized if a 28.2 percent fall in orders is seen in March from February.

Given the slim chances that such a big fall will occur, there is the possibility core machinery orders for the January-March period may fall by a smaller margin than projected by the agency, he said.

The agency did not change from last month its assessment of a recovery trend in machinery orders, Senoo said, adding that private-sector capital spending could bottom out in the first half of the current fiscal year.

Orders placed by manufacturers in February rose 5.5 percent from the previous month and 22.3 percent from the year before.

Active orders for semiconductor testing equipment placed by electrical machinery makers and orders for computer systems placed by food makers contributed to the 5.5 percent rise.

Orders placed by nonmanufacturers dropped 10.4 percent from January but were up 6.2 percent from a year earlier.

The telecommunications sector and the wholesale and retail sectors were seen as particularly inactive in placing orders.

Including volatile orders for ships and from power companies, private-sector orders came to 1.072 trillion yen, down 7.7 percent from the month before but up 8 percent from the previous year.

Overall orders, including those placed by the public sector, totaled 2.072 trillion yen, down 6.1 percent from the previous month but up 7.8 percent from the previous year.

Orders from abroad declined 10.3 percent from the previous month, but rose 20.7 percent from a year earlier. The month-on-month fall was apparently a result of the yen’s strength against the U.S. dollar, Senoo said.