Tuesday, July 10, 2012

Core private-sector machinery orders fell a seasonally adjusted 14.8 percent in May from the previous month, the largest drop in more than seven years, underscoring weakness in capital investment amid lingering worries over the eurozone debt crisis and strong yen, the government said Monday.

The core orders, which exclude those normally seen as volatile such as orders for ships as well as from electric utilities, were valued at ¥671.9 billion, the Cabinet Office said.

The figure marked the sharpest drop since April 2005, when officials started compiling comparable data.

The office, however, maintained its basic assessment on the leading indicator of corporate capital investment, saying machinery orders have been in a "trend of moderate increase." "The results in May fell due in part to a simple reaction from the previous month," it added, referring to the 5.7 percent rise scored in April.

Machinery orders from manufacturers fell 8.0 percent to ¥301.9 billion and those from nonmanufacturers were down 6.4 percent to ¥413.5 billion, both marking the first drop in two months.

By industry, the chemical and nonvehicle transport machinery sector led the decline of manufacturers, reflecting the loss of relatively large orders the sectors received the previous month.

Among nonmanufacturers, wholesale and retail, and financial industries marked declines.

Orders from the nation's public sector slid 21.8 percent to ¥225.0 billion, the second straight monthly drop. Demand for Japanese machinery from outside the country was up 0.3 percent to ¥790.1 billion.

Overall orders, received by 280 select machinery makers and covering demand from the private and public sectors as well as from abroad, shrank 14.5 percent to ¥1.8137 trillion, registering the second consecutive monthly decline.

Surplus plummets 62.6%

Japan's current account surplus shrank 62.6 percent in May from a year earlier to ¥215.1 billion, affected by a continued goods trade deficit as a result of large energy resource imports, the government said Monday.

The balance of international payments, one of the widest gauges of trade for a country, deteriorated due to the biggest fall in nearly two years in the income account balance, which the Finance Ministry said was caused by the one-time effect of a large capital outflow from Japan.

The value of goods exports showed signs of continued recovery, up 11.3 percent to ¥5.05 trillion for the third-straight month of increase. But imports were bigger, rising 11.1 percent to ¥5.9 trillion, expanding for more than two years. As a result, the trade balance logged ¥848.2 billion in deficit.

Vehicles and auto parts led the gain in exports, largely helped by a U.S. economic recovery, the ministry said in a preliminary report. However, imports of energy resources, particularly liquefied natural gas, due to the shutdown of all nuclear reactors have remained a significant weight on the balance.

The ministry said the adverse implication of large LNG imports will likely diminish in the second half of the year.

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