Japan March Machinery Orders Drop More Than Expected
May 15 -- Japanese machinery orders fell more than economists expected
in March as a global slowdown and waning profits dissuaded companies
from investing in factories and equipment.
Equipment orders, which signal capital spending in the next three to
six months, declined 8.3 percent from February, when they fell 12.7
percent, the Cabinet Office said today in Tokyo. The median estimate
of 33 economists surveyed by Bloomberg News was for a 5.1 percent
drop.
Companies surveyed in today's re****t forecast that orders in the
second quarter will fall 10.3 percent. Toyota Motor Corp. last week
said it will cut spending on plant and equipment as falling U.S.
sales, higher commodity prices and a stronger yen erode earnings.
``We expect capital spending -- manufacturing sector machinery
investment in particular -- to enter a correction in April-June,''
Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs Group Inc.,
said before the re****t was released. ``Companies are lowering earnings
forecasts one after another.''
Toyota last week forecast its first profit decline in seven years and
said it would cut spending on research and development. The
automaker's U.S. sales fell for four consecutive months to March and
soaring steel and energy costs, along with the yen's 6.3 percent gain
against the dollar this year, have made each sale less profitable.
Analysts predict that a 1 percent drop in business spending last
quarter was the main reason Japan's expansion slowed in the three
months ended March 31. The gross domestic product re****t, due tomorrow
at 8:50 a.m. in Tokyo, will probably show growth slowed to 2.5 percent
from 3.5 percent in the fourth quarter, according to surveyed
economists.
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