Core machinery orders plunge 7.1%

Kyodo

Key machinery orders dropped a sharper than expected 7.1 percent in December to ¥733.2 billion, the first decline in two months, affected by weakness in some technology sectors, government data showed.

Core private-sector orders, excluding those for ships and from utilities, marked a downturn following a strong 14.8 percent expansion of in November, the data showed Thursday.

The seasonally adjusted figure for orders, an indicator of future capital spending by companies, logged a 5 percent fall, also weaker than market forecasts.

Analysts said the contraction was due largely to a reaction to the previous month’s gains.

“Machinery orders are well known for being volatile. Since the (March 11) earthquake, the timing of receiving orders has been more variable and therefore the volatility seems accelerated,” said Lee Chi Woong, an economist at Goldman Sachs Japan Co.

The Cabinet Office maintained its basic assessment, saying machinery orders are “seesawing.”

Orders from manufacturing sectors fell 7.1 percent to ¥314.2 billion, while those from nonmanufacturers slid 6.0 percent to ¥413.1 billion.

Electric machinery makers marked a 19.8 percent fall, leading a wider decline in technology sectors due to the recent slowdown in Japanese exports. The yen’s appreciation and the gloomier outlook for the global economy amid the sovereign debt crisis in Europe has put the nation’s exporters in a bind.

General machinery makers fell 5.5 percent and manufacturers of telecommunications equipment dropped 18.2 percent.