Machinery orders unexpectedly fell to a record low in November as tumbling domestic demand overwhelmed an export revival.
Orders, an indicator of business investment in three to six months, slid 11.3 percent from October, the Cabinet Office said Thursday. The drop was the sharpest in a year. Producer prices fell for a 12th month, a separate report showed.
The reports indicate concern that the economy’s improvement has yet to spread from exporters and to spur spending by companies and households. Prime Minister Yukio Hatoyama unveiled a stimulus package and a record budget last month to spur domestic demand.
“It’s too early to say the trend for business investment has recovered, despite solid production and exports,” said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute in Tokyo. “Without a recovery in capital spending, Japan will remain susceptible to shocks from overseas economies, and it’s hard to imagine a full-fledged recovery soon.”
The drop brought bookings to ¥625.3 billion ($6.8 billion), the lowest monthly total since comparable data were first compiled in April 1987. The Cabinet Office cut its assessment of factory orders for the first time in 12 months, saying they are “starting to level off, but weak movements are seen in some areas.”
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