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Japan's machinery orders up 1.6 percent in June
AFP - Wednesday, August 11
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TOKYO (AFP) - – Japan's core machinery orders, a key indicator of future corporate capital spending, rose by a smaller-than-expected 1.6 percent in June from the previous month, official data showed Wednesday.
The rise came after a 9.1 percent drop in May but was much smaller than the 5.5 percent rise expected by economists, according to a survey carried out by Dow Jones Newswires and the Nikkei economic daily.
Core orders are private-sector orders excluding particularly volatile demand from power companies and for ships.
The small rise in June indicates there will be no sharp recovery in corporate capital spending in the near term and suggests companies may be deferring spending as Japan's export-driven recovery loses steam.
The market was surprised by a fall of 1.5 percent in industrial output in June from the previous month, missing expectations of a 0.l percent rise, data showed last month.
The government expects machinery orders to grow by just 0.8 percent in the July-September quarter.
"Orders that had grown at a rapid pace in the January-March period are likely to slow down in the summer. Due to an uncertain outlook, companies are becoming prudent over increasing capital spending," said Naoki Murakami, an analyst at Monex Securities.
The pace will also likely slow as a strong yen eats into profits and as governments around the world turn off the tap on stimulus measures, predicted Barclays Capital chief economist Kyohei Morita.
With Wednesday's rise below market expectations, industrial equipment maker Fanuc fell 2.77 percent and machine tool maker Okuma plunged 3.77 percent in Tokyo morning trade.
"The fact that we're seeing a slowdown in the global economy -- not only in the US and Europe -- is weighing on the market," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.
Japan will withdraw incentives for purchases of environmentally-friendly cars next month, which were launched last year to kick-start a recovery after a bruising recession.
Japanese firms face a litany of woes -- overseas demand moderating amid an increasingly uncertain global economic outlook, the strong yen and domestic demand threatened by the waning effects of government stimulus.
-- Dow Jones Newswires contributed to this article --
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