— See Separate Table For Details Of Individual Forecasts
TOKYO (MNI) – Japan’s core private-sector machinery orders appear
to have posted a second straight month-on-month drop in March, down by a
seasonally adjusted 10.0% after a 2.3% fall in February, in the
aftermath of the March 11 earthquake disaster, according to the median
forecast of economists surveyed by Market News International.
The Cabinet Office will release March machinery orders data and
annual revisions to seasonal adjustments on previous figures at 0850 JST
on Monday, May 16 (2350 GMT on Sunday).
Core machinery orders, excluding orders for ships and from electric
power firms, are widely seen as a leading indicator for private-sector
capital investment.
A 10% drop would be the largest m/m decline since -10.3% marked in
September 2010.
Economists said uncertainty over business prospects has prompted
firms to cancel or suspend their capital investment plans since the
March 11 disaster wrecked northeastern Pacific coast, disrupting
automobile and electronics supply chains and causing the worst nuclear
radiation crisis since the 1986 Chernobyl meltdown.
Another piece of data released recently supports the median
forecast.
Orders for March machine tools in the domestic market, which are
seen as a leading indicator for core machinery orders, rose a revised
66.1% y/y in March, decelerating from a 89.5% rise in February, data
released by Japan Machine Tool Builders’ Association showed.
But Takehiro Sato, chief economist at Morgan Stanley MUFG, forecast
a relatively small 3.3% fall in core orders, saying that firms in
western Japan appeared to have boosted their production capacity to cope
with supply chain disruptions and power shortages in eastern cities.
The median forecast indicates that core machinery orders are likely
to show a drop in the January-March quarter from the previous three
months, failing to meet the government projection of +2.7% q/q.
The focus is on the Cabinet Office’s projection for April-June core
machinery orders, which will be released with the March data.
Looking ahead, Ryohei Kasahara, economist at Daiwa Institute of
Research, said, “Capital investment will be sluggish for the time being
due to worsening business sentiment.”
“Recovery of capital investment is expected in or after the second
half of fiscal 2011, when demand for reconstruction of quick-hit areas
will fully emerge.”
skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **
[TOPICS: M$J$$$,M$A$$$,MAJDS$]
