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Machinery orders rose less than forecast in June, a sign that companies may be holding off on spending as the export-led recovery cools.

Orders, an indicator of business investment in three to six months, gained 1.6 percent from May, when they dropped 9.1 percent in the biggest decline since August 2008, the Cabinet Office said Wednesday. The median forecast of 25 economists in a survey was for a 5.4 percent gain.

Profits of exporters from Toyota Motor Corp. to Nissan Motor Co. are under threat from the rising yen, which is approaching a 15-year high against the dollar just as global demand starts to cool.

“Today’s report confirms that companies have little intention of investing right now,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. “With the yen continuing to strengthen, companies just can’t aggressively invest at home.”

Slower expansions in China and the U.S., Japan’s biggest markets, may be a drag on its export-led recovery. According to the median forecast of 18 economists, the Japanese economy probably grew an annualized 2.3 percent in the three months that ended June 30, slowing from a 5 percent expansion in the first quarter.

Instability in the global financial markets is weighing somewhat on business spending, according to Keisuke Tsumura, a parliamentary secretary at the Cabinet Office.

Capital spending “still remains in a fragile condition, which could easily be affected by movements in the global financial markets,” Tsumura said.

The strong currency may also derail the recovery in corporate earnings. Finance Minister Yoshihiko Noda said Wednesday recent movements in the yen have been “a little bit one-sided” and pledged to “keep a close watch on the market.” Bank of Japan Gov. Masaaki Shirakawa said Tuesday the stronger yen is a downside risk for corporate sentiment.

A separate report Wednesday showed that producer prices unexpectedly fell in July from a year earlier. Shinkin’s Miyazaki said expectations that price declines will continue are also keeping businesses from spending, even as their earnings rebound.

“With deflation, companies are choosing to spend their money through cutting prices, instead of on capital spending,” Miyazaki said.

The Cabinet Office forecast machinery orders will increase 0.8 percent in the three months ending Sept. 30, after they rose 0.3 percent in the second quarter. The government maintained its view that they are showing signs of “picking up.” From a year earlier, orders fell 2.2 percent.

“Companies are becoming cautions about increasing output amid growing uncertainty over the economic outlook in the U.S. and Europe,” Susumu Kato, chief economist for Japan at Credit Agricole CIB and CLSA, said before the report.

Toyota lifted its full-year net income projection to ¥340 billion on Aug. 4, assuming that the yen trades at 90. A ¥1 appreciation against the dollar lowers Toyota’s annual operating profit by ¥30 billion.

Nissan is “very concerned” about the strong yen, Chief Operating Officer Toshiyuki Shiga said last week. Nissan swung to a first-quarter profit as demand revived in North America and sales grew in Asia.

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