— Adds Official, Economist Comments, Details In Paragraphs 6-13
— Japan Aug Machine Orders +11.0% M/M Vs July -8.2%
— Japan Aug Machine Orders MNI Poll Median Forecast +5.0% M/M
— Japan Aug Core Machinery Orders Post 1st M/M Rise In 2 Months
— Japan Gov Repeats: Machine Orders Picking Up
— Japan Aug Core Machinery Orders +2.1% Y/Y Vs July +4.0%
— Japan Aug Machine Orders From Overseas +32.3% M/M; July -9.8%

TOKYO (MNI) – Japan’s core private-sector machinery orders
rebounded sharply in August, posting the first rise in two months, but
orders from non-manufacturers, the key to a steady recovery, slumped for
the second straight month, data from the Cabinet Office showed on
Wednesday.

Analysts have warned of growing downside risks as overseas
economies are showing signs of a slowdown and as the yen stays near a
record high against the dollar.

In August, core private-sector machinery orders, which exclude
volatile demand from electric utilities and for ships and viewed as
a leading indicator of corporate capital investment, rebounded by 11.0%,
following a 8.2% fall in July.

The August core figure came in much stronger than the median
forecast for a 5.0% rise in a Market News International survey of
economists.

The Cabinet Office maintained its longer-term assessment, saying,
“Machinery orders are picking up.”

“We left our assessment unchanged because overall orders from the
non-manufacturing sector fell while eight of the 12 industries in the
sector showed gains,” a Cabinet Office official said. “Orders from the
key industries including telecommunications and financial firms continue
to show ups and downs.”

“We haven’t heard from surveyed companies that the appreciation of
the yen is pushing down machinery orders,” she said.

Meanwhile, Tatsushi Shikano, senior economist at Mitsubishi UFJ
Morgan Stanley Securities, said the quick recovery in earthquake-hit
supply chains is behind the recent pickup in machinery orders.

“While overseas economies are showing some signs of a slowdown, an
expected surge in public demand related to the implementation of
supplementary budgets is likely to offer some buffer against slower
overseas demand, supporting capital investment,” he said.

“But a reversal of the yen’s rise is a must for this scenario to
materialize.”

Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset
Management, forecast that while machinery orders in September may drop
after the strong rise in August, core orders will show a third straight
quarter-on-quarter rise in July-September.

“That will support the outlook for a modest gain in capital
investment,” he said.

The data showed that unexpectedly strong machinery orders in August
were led by sharp rebounds in orders for computers and chip-making
machines from electrical machinery makers as well as those from
manufacturers of information and communication electronics equipment.

In August, core private machinery orders rose 2.1% from a year
earlier, marking the fourth straight y/y rise, after a 4.0% rise in
July.

Offshore orders, which are not part of core orders, surged 32.3%
month on month in August, the first rise in six months, following a 9.8%
decline in July.

But overseas demand excluding a large order for power generating
machinery was “weak” in August, another Cabinet Office official told
reporters.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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