Japan Machinery Orders December 2007

Japan's machinery orders fell for the second consecutive month in December as manufacturers scaled back investment in anticipation of slowing global economic growth. Machinery orders which provide us with a useful indicator of business spending for the coming three to six months, dropped by 6.8% in December from November (on a seasonally adjusted basis) the Cabinet Office said today in Tokyo. In November total orders fell from October by 5.9%. Export orders fell 4.9% from November, when they fell 18.4% from October. So there is strong prima facie evidence that export growth may be week in Q1 2008.



Over the October-December quarter orders rose by 2.5% compared with July-Sept on a seasonally adjusted basis. Private sector orders fell 4 percent in 2007 compared with 2006, the first decline since 2002 when the economy emerged from recession.

The data on machinery orders only confirms the impression given in other reports earlier this week which all tend to show that the Japanese economy is hovering around the recession mark. The leading indicator of the economic outlook this week signaled for a fifth straight month that growth is losing steam. Manufacturers are also signalling they plan to cut production in January and February, the first time they anticipate back-to-back declines since 2005, a Trade Ministry report showed last month. Each of Japan's three previous recessions since 1991 have been initiated by output slumps.