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Core machinery orders up for second straight month

Kyodo

Core private-sector machinery orders increased for the second straight month in November, due in part to receding worries about a serious downturn in the global economy, the government said Wednesday.

The orders, which exclude those for ships as well as from utilities because of their volatility, grew a seasonally adjusted 3.9 percent from October to ¥732.1 billion, the Cabinet Office said.

The government, however, said machinery orders, a leading indicator for capital spending by companies, haven’t reached a strong state.

A Cabinet Office official said the orders from manufacturers, which climbed 3.9 percent on month in November, showed signs of having bottomed out, but she added it is uncertain whether business investment will grow across the board.

“We still believe the pace of growth in machinery orders is likely to remain moderate in the longer term,” the official said, amid the lingering concern over a global economic slowdown.

Core machinery orders gained 2.6 percent in October after falling 4.3 percent in September and 3.3 percent in August.

In December, the government said in a monthly report the economy “has shown weakness recently due to the deceleration of the world economy.”

The Japanese economy contracted for a second straight quarter in the three months through September, shrinking an annualized real 3.5 percent, indicating it has entered a mild recession amid sluggish demand both at home and abroad.

Wholesale prices down

Wholesale prices fell 0.8 percent in 2012 from the previous year, as the global economic slowdown sapped demand for steel and other materials used in manufacturing products, the Bank of Japan said Wednesday.

The index of corporate goods prices stood at 100.7 against the 2010 base of 100, the central bank said in a preliminary report.

By product, prices of iron and steel dropped 6.7 percent, and those of nonferrous metal fell 6.6 percent.

The BOJ also attributed the overall decline to a 10.5 percent plunge in prices of information and communications equipment amid fierce global sales competition.

But prices of electricity, gas and water shot up 9.2 percent following power rate hikes amid the reactor shutdowns because of the Fukushima nuclear plant crisis that started in 2011.

Export prices declined 2.0 percent from the previous year in yen terms and were down 1.5 percent on a contract currency basis.

Import prices fell 0.1 percent in yen terms but increased 0.1 percent on a contract currency basis.