— Japan Core Machinery Orders Post 2nd M/M Rise In Row
— Japan Govt Repeats View: Machine Orders Picking Up
— Japan July Core Machinery Orders +15.9% Y/Y Vs June -2.2%
— Japan July Core Machinery Orders Post 1st Y/Y Rise In 2 Months

TOKYO (MNI) – Japan’s core private-sector machinery orders
surged by a seasonally adjusted 8.8% in July from the previous month,
posting the second straight m/m rise after rising 1.6% in June and
slumping 9.1% in May, the Cabinet Office said on Wednesday.

The June core figure came in stronger than the consensus forecast
of a 1.8% m/m rise.

Compared to a year earlier, core private machinery orders rebounded
15.9% in July, after posting their first y/y drop in four months in June
(-2.2%). In March they rose 1.2%, the first y/y gain in 21 months,
recovering from the record 39.5% plunge marked in January 2009.

Looking at the longer-term trend, the Cabinet Office repeated is
assessment adopted in June, saying, “there are signs of a pickup” in
machinery orders.

The government upgraded its view in June, based on April figures,
for the second month in a row.

Core private-sector machinery orders, which exclude volatile demand
from electric utilities and for ships, are viewed as a leading indicator
of corporate capital spending.

Core private orders minus mobile handsets, a fairly new reading
used as a guide to the underlying orders trend, rose 6.4% month on month
in July after rising 6.1% in June and falling 13.3% in May.

Core orders in the private manufacturing sector marked the second
straight m/m rise in July, rising 10.1% from the previous month to
Y310.1 billion after rising 9.9% in June and slumping 13.5% in May. In
April it fell 5.5%, the first month-on-month drop in five months.

The increase in the sector was led by stronger orders from textile
machinery, chemical and chemical products, food and beverages,
information and communication electronics equipment as well as general
machinery.

Orders from the non-manufacturing sector excluding shipping lines
and power firms marked the first m/m rise in three months, up 8.1% m/m
at Y453.2 billion in July, reversing from the 3.9% drop in June.

The rebound in non-manufacturing demand was led by higher orders
from finance and insurance, real estate, wholesale and retail trade as
well as telecommunications.

In February 2010, core orders for the non-manufacturing sector fell
to a recent low of Y393.5 billion, close to the lowest level of orders
from non-manufacturers at Y369.0 billion recorded in May 1987.

The total non-manufacturing sector, including shipping lines and
power firms, rose 4.9% m/m in July, posting the second straight m/m gain
after rising 6.3% in June.

The key to a rise in total core domestic private-sector orders is a
recovery of demand from non-manufacturers, including telecom carriers
and transportation firms, because the total demand from
non-manufacturers is much higher than that from manufacturers.

The telecommunications industry has been hit by stiff price
competition among mobile carriers, with demand fluctuating up and down
in recent months. Orders from the sector rose 3.4% m/m in July after
falling 6.4% in June and rising 2.2% in May.

Meanwhile, orders from finance and insurance firms, whose capital
expenditures for merging computer network systems has run its course,
have shown signs of a pickup. In July they rebounded by 28.3% m/m after
slipping 8.6% in June and rising 3.9% in May.

Outside the core domestic private sector, machinery orders from
overseas showed the third consecutive m/m gain, up 2.6% in July at
Y799.5 billion after rising 2.4% in June. In April orders from other
countries fell 3.7%, the first drop in five months.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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