Japan Machinery Orders Down In March

Core private sector machinery orders fell 1.3 percent in March from the previous month to $7.6 billion, the Japanese government said Friday.

TOKYO (AP) -- Japanese machinery orders turned lower again in March, suggesting that companies remain wary of spending even amid emerging signs that the world's second-largest economy has bottomed.

Core private sector machinery orders fell 1.3 percent in March from the previous month to 727.9 billion yen (US$7.6 billion), the government said Friday. The closely watched figure, which excludes those from electric power companies and shipbuilders due to their volatility, is a key indicator of companies' outlook for capital expenditures.

It marked the first decline in two months after a 1.4 percent gain in February.

Still, the result beat expectations and helped push financial markets higher. The benchmark Nikkei 225 stock average rose 1.7 percent during the morning session. Kyodo news agency had predicted a fall of 5.2 percent based on a survey of economists.

Makers of steel products and transport equipment booked fewer orders, while auto and general machinery firms posted gains. Overseas orders surged 46 percent.

For the January-March period, machinery orders slumped 9.9 percent, the Cabinet Office said. It predicts the decline to ease to 5 percent in the three months through June.

Although recent data have shown that Japan's recession may be easing, manufacturers continue to restructure operations to try to return to profitability. The unprecedented slump in global demand, as well as a stronger yen, has led to massive losses for many of the country's bellwether brands including Toyota and Hitachi.

On Thursday, Sony Corp. reported its first annual net loss in 14 years and forecast an even bigger loss this year, saying no quick recovery was in sight.

The Japanese electronics and entertainment company said Thursday it lost 165 billion yen ($1.72 billion) in the January-March quarter, compared to a 29 billion yen profit for the same period the previous year. That brought its full fiscal year loss to a $1 billion. Sony said it will shutter three plants in Japan and is in the midst of cutting 16,000 workers.

Next week, the government will release gross domestic product data for the January-March quarter. Analysts expect Japan's economy to have contracted at the fastest annual pace since 1955.

In response, Prime Minister Taro Aso has proposed a record extra budget of nearly 15 trillion yen ($156 million) to finance various stimulus measures. The extra budget will finance projects to support the unemployed and small businesses, boost consumer spending and advance environmentally friendly initiatives.

The budget, which was approved by the lower house Wednesday, will almost certainly be enacted in June. Although the opposition-controlled upper house is expected to vote down the extra budget, the more powerful lower house can override its decision.

"We should see progress from leveling out to gradual recovery for manufacturing centered on industries that are policy beneficiaries," said Chiwoong Lee, an economist at Goldman Sachs in Tokyo.