Japan’s machinery orders unexpectedly fell for a second straight month in October, signaling that a slowing global economy and the strong yen are prompting companies to postpone investment.
Bookings, an indicator of capital spending, decreased 6.9 percent from a month earlier, the Cabinet Office said in Tokyo today, a larger decline than predicted by all 27 economists surveyed by Bloomberg News.
Shares in machinery makers including Fanuc Corp. (6954) and Tokyo Electron Ltd. (8035) fell after the report.
The government said today that exports in the first 20 days of November fell at the fastest pace since May, adding to signs that Europe’s fiscal crisis and a yen that rose to a postwar record on Oct. 31 against the dollar are weighing on demand.
“Nobody is really forecasting Europe will break up, but corporate managers have to prepare for the worst,” said Takuji Okubo, chief Japan economist in Tokyo at Societe Generale SA. “It’s understandable that they would like to delay large capital investment decisions.”
The yen traded at 77.64 per dollar as of 3:15 p.m. in Tokyo compared with its post World War II record of 75.35 and the Nikkei 225 Stock Average slid 0.7 percent to 8,664.58.
The Nikkei newspaper reported that Group of 20 economies were preparing a $600 billion International Monetary Fund lending program for Europe.
A Japanese government official speaking on the condition of anonymity in accordance with ministry policy said he hadn’t heard about any specific plans for more lending.
Two-Month Slide
It was the first time machinery orders fell for two consecutive months since Feb. 2010, an indication capital expenditure could slow next year as Japan struggles to recover from the March 11 earthquake and tsunami.
Prime Minister Yoshihiko Noda ordered a fourth extra budget last week, a step unseen since postwar reconstruction.
Exports in the first 20 days of November fell 7.2 percent from the same period a year earlier, the Finance Ministry said in a report today.
Bank of Japan (8301) Governor Masaaki Shirakawa has said that Europe’s debt crisis is the biggest risk for Japan’s economy. Standard & Poor’s put 15 euro nations including Germany and France on review for a possible downgrade this week and indicated Nov. 24 that it could be preparing to lower Japan’s sovereign grade.
‘Challenges’
Moody’s Investors Service said today Japan may face “long- term key challenges” to its credit rating, already lowered in August because of a swelling debt load. It said the outlook for the nation’s Aa3 rating is stable.
The upper house of parliament ratified a third extra budget worth 12.1 trillion yen ($156 billion) last month to help rebuild coastal areas of northeastern Japan devastated by the disaster. Two earlier packages were worth a total of 6 trillion yen.
The yen trading close to a postwar high against the dollar is prompting exporters including Nissan Motor (7201) Co. to consider shifting production overseas.
Nissan Chief Executive Officer Carlos Ghosn told reporters last week that Japan’s second- largest carmaker will gradually shift output abroad, saying, “It’s difficult to make an investment in a country with no return.”
Flooding in Thailand has disrupted the supply chains of Japanese companies with operations in the southeast Asian country. Honda Motor Co. and Toyota Motor Corp. (7203) scrapped profit forecasts after Thailand’s worst floods in nearly 70 years halted production at factories.
bloomberg.com
Bookings, an indicator of capital spending, decreased 6.9 percent from a month earlier, the Cabinet Office said in Tokyo today, a larger decline than predicted by all 27 economists surveyed by Bloomberg News.
Shares in machinery makers including Fanuc Corp. (6954) and Tokyo Electron Ltd. (8035) fell after the report.
The government said today that exports in the first 20 days of November fell at the fastest pace since May, adding to signs that Europe’s fiscal crisis and a yen that rose to a postwar record on Oct. 31 against the dollar are weighing on demand.
“Nobody is really forecasting Europe will break up, but corporate managers have to prepare for the worst,” said Takuji Okubo, chief Japan economist in Tokyo at Societe Generale SA. “It’s understandable that they would like to delay large capital investment decisions.”
The yen traded at 77.64 per dollar as of 3:15 p.m. in Tokyo compared with its post World War II record of 75.35 and the Nikkei 225 Stock Average slid 0.7 percent to 8,664.58.
The Nikkei newspaper reported that Group of 20 economies were preparing a $600 billion International Monetary Fund lending program for Europe.
A Japanese government official speaking on the condition of anonymity in accordance with ministry policy said he hadn’t heard about any specific plans for more lending.
Two-Month Slide
It was the first time machinery orders fell for two consecutive months since Feb. 2010, an indication capital expenditure could slow next year as Japan struggles to recover from the March 11 earthquake and tsunami.
Prime Minister Yoshihiko Noda ordered a fourth extra budget last week, a step unseen since postwar reconstruction.
Exports in the first 20 days of November fell 7.2 percent from the same period a year earlier, the Finance Ministry said in a report today.
Bank of Japan (8301) Governor Masaaki Shirakawa has said that Europe’s debt crisis is the biggest risk for Japan’s economy. Standard & Poor’s put 15 euro nations including Germany and France on review for a possible downgrade this week and indicated Nov. 24 that it could be preparing to lower Japan’s sovereign grade.
‘Challenges’
Moody’s Investors Service said today Japan may face “long- term key challenges” to its credit rating, already lowered in August because of a swelling debt load. It said the outlook for the nation’s Aa3 rating is stable.
The upper house of parliament ratified a third extra budget worth 12.1 trillion yen ($156 billion) last month to help rebuild coastal areas of northeastern Japan devastated by the disaster. Two earlier packages were worth a total of 6 trillion yen.
The yen trading close to a postwar high against the dollar is prompting exporters including Nissan Motor (7201) Co. to consider shifting production overseas.
Nissan Chief Executive Officer Carlos Ghosn told reporters last week that Japan’s second- largest carmaker will gradually shift output abroad, saying, “It’s difficult to make an investment in a country with no return.”
Flooding in Thailand has disrupted the supply chains of Japanese companies with operations in the southeast Asian country. Honda Motor Co. and Toyota Motor Corp. (7203) scrapped profit forecasts after Thailand’s worst floods in nearly 70 years halted production at factories.
bloomberg.com
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