— Japan Q2 Core Machinery Orders Seen +1.6% M/M Vs Q1 +2.9%
— Japan Govt Upgrades View: Machine Orders Have Stopped Falling
— Japan Mar Core Machinery Orders +1.2% Y/Y Vs Feb -7.1%
— Japan Mar Core Machinery Orders Post 1st Y/Y Rise In 21 Mths
TOKYO (MNI) – Japan’s core private-sector machinery orders
rose a seasonally adjusted 5.4% in March from the previous month,
posting the first m/m rise in three months after a revised 3.8% drop
(preliminary -5.4%) in February, the Cabinet Office said on Monday.
The February core figure came in largely in line with the consensus
call for a 5.3% m/m gain.
The Cabinet Office made annual revisions to seasonal adjustments,
effective with March figures.
From a year earlier, core private machinery orders rose 1.2% in
March after -7.1% in February, posting the first y/y gain in 21 months.
They have recovered from the record 39.5% plunge marked in January 2009.
The Cabinet Office upgraded its assessment of machinery orders,
saying, they “have stopped falling.” Until last month it said that “the
downtrend is coming to an end.”
“We revised up our assessment as core orders posted the first
rise in three months while the forecast points to a third straight
quarterly rise,” said a Cabinet Office.
“We can say machinery orders have hit bottom but their level is
still low as seen in continued drops when compared with a year earlier.”
If machinery orders continue improving, the government would be
likely to revise up its view further to say there are signs of a
pickup.
In March, when January data were reported, the office upgraded its
view for the first time in four months as the decline in January was
limited after a sharp gain in December.
The Cabinet Office said core orders for the April-June quarter are
estimated to rise 1.6% from January-March, when they posted a 2.9% rise
against the government’s forecast of +2.0%. An April-June rise would be
a third straight quarter-on-quarter increase.
In the final quarter of 2009, core private orders rose a revised
1.1% on-quarter, marking the first q/q gain in seven quarters since
January-March 2008.
Core orders are still expected to post a year-on-year drop of -4.0%
in April-June vs. -1.8% in January-March and -14.0% in
October-December.
For the whole of fiscal 2009 that ended in March, core private
orders plunged by a record 20.6% to Y8.43 trillion, the lowest level on
record. It was a third straight year of decline and surpassed the
previous record drop of 18.6% marked in fiscal 1998 and the previous
low level of Y9.38 trillion in fiscal 1987.
In March, the orders in the private manufacturing sector rose a
revised 3.1% (preliminary +0.3%) from the previous month to Y316.5
billion after rising a revised 4.4% (preliminary -0.3%) in February.
It was the fourth straight month-on-month rise, the longest stretch
of gains in about 10 years since the four-month period from November
1999 to February 2000.
The increase in the sector was led by orders for shipbuilding,
general machinery as well as iron and steel.
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 orders for the non-manufacturing sector excluding shipping
lines and power firms jumped 12.6% from the previous month to Y443.1
billion, marking the first m/m rise in three months after falling 3.7%
(preliminary -4.0%) in February.
The rise in the sector was led by orders from telecommunications as
well as finance and insurance, which is a good sign as telecom firms
carry a heavy weight in the sector.
In February 2010, core orders for the 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 only 2.1% m/m, the second straight monthly rise, after
gaining a revised 8.3% in February.
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 amount of orders for
non-manufacturers is much higher than that for manufacturers.
The telecommunications industry has been hit by stiff price
competition among mobile carriers but it has now posted the second
straight month-on-month rise.
Orders from finance and insurance, whose capex in merged computer
network systems has run its course, have also shown signs of a pickup,
up two months in a row in March.
Outside the core domestic private sector, machinery orders from
overseas posted the fourth consecutive month-on-month rise, up 3.9% in
March at Y768.8 billion after rising a revised 3.0% (preliminary +8.4%)
in February.
It was the longest stretch of m/m gains in eight years since the
four-month period from December 2001 to March 2002.
tokyo@marketnews.com
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