— Japan Q3 Core Machine Orders Seen +0.8% Q/Q Vs Q2 +0.3%
— Japan Q3 Rise In Core Orders Would Be 4th Straight Q/Q Gain
— Japan Govt Repeats View: Machine Orders Picking Up
— Japan June Core Machinery Orders -2.2% Y/Y Vs May +4.3%
— Japan June Core Machinery Orders Post 1st Y/Y Drop In 4 Mths

TOKYO (MNI) – Japan’s core private-sector machinery orders
rebounded a seasonally adjusted 1.6% in June from the previous
month, posting the first rise in two months after slumping 9.1% in May,
the Cabinet Office said on Wednesday.

The June core figure came in weaker than the consensus forecast of
a 6.1% m/m rise.

Core orders are forecast by the Cabinet Office to post a fourth
straight quarter-on-quarter increase, up 0.8% in July-September, after
rising 0.3% in April-June and gaining 2.9% in January-March.

From a year earlier, core private machinery orders showed the first
drop in four months, down 2.2% in June after +4.3% in May and +9.4% in
April. In March it rose 1.2%, the first y/y gain in 21 months. They have
recovered from the record 39.5% plunge marked in January 2009.

Looking at the longer-term trend, the Cabinet Office repeated is
assessment adopted in June, saying, “there are signs of a pickup” in
machinery orders.

In June when reporting April figures, it upgraded its view for the
second month in a row.

Core private-sector machinery orders, which exclude volatile demand
from electric utilities and for ships, are viewed as a leading indicator
of corporate capital spending.

In June, the core orders in the private manufacturing sector marked
the first m/m gain in three months, rebounding 9.9% from the previous
month to Y281.6 billion after slumping 13.5% in May. In April it fell
5.5%, the first month-on-month drop in five months.

The increase in the sector was led by stronger orders from the
petroleum and coal sector and non-metallic mineral sector (both
showing sharp gains after large drops in the previous month), food and
beverages, iron and steel as well as information and communication
electronics equipment.

Orders from the non-manufacturing sector excluding shipping lines
and power firms were weak again, down 3.9% m/m at Y419.2 billion in
June, posting the second straight m/m drop after falling 6.0% in May.

The fall in non-manufacturing demand was led by softer orders from
information services, wholesale and retail trade as well as finance and
insurance.

In February 2010, core orders for the non-manufacturing sector fell
to a recent low of Y393.5 billion, close to the lowest level of orders
from non-manufacturers at Y369.0 billion recorded in May 1987.

The total non-manufacturing sector, including shipping lines and
power firms, rebounded by 6.3% m/m, posting the first gain in two months
after slumping 9.5% in May.

The key to a rise in total core domestic private-sector orders is
a recovery of demand from non-manufacturers, including telecom carriers
and transportation firms, because the total demand from
non-manufacturers is much higher than that from manufacturers.

The telecommunications industry has been hit by stiff price
competition among mobile carriers, posting the second month-on-month
fall in orders in four months, down 6.4% m/m vs. a 2.2% rise in May.

Orders from finance and insurance, whose capital expenditure for
merging computer network systems has run its course, have shown
signs of a pickup, but in June they fell 8.6% m/m, the second drop in
four months after rising 3.9% in May.

Outside the core domestic private sector, machinery orders from
overseas showed the second consecutive m/m gain, up 2.4% in June at
Y779.2 billion after rising 2.7% in May. In April orders from other
countries fell 3.7%, the first drop in five months.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]