— See Separate Table For Details Of Individual Forecasts

TOKYO (MNI) – Japan’s core private-sector machinery orders are
expected to have posted a fourth consecutive month-on-month rise in
April, up by a seasonally adjusted 1.9% under the new core measure after
a 1.0% gain in March, according to the median forecast of economists
surveyed by Market News International.

The Cabinet Office will release April machinery orders data at 0850
JST on Monday, June 13 (2350 GMT on Sunday).

The Cabinet Office will completely remove orders for mobile
handsets from the key core machinery orders figure — starting with
April data — so that the data give a clearer picture of the trend in
demand.

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

But the existing core reading includes orders for mobile handsets,
which are mostly for households, and thus do not help to accurately
gauge capex plans.

The Cabinet Office has been releasing “core orders minus mobile
handsets” as a reference figure since April 2005 data, but it will now
make this series the official “core” reading, replacing the existing
core orders that only exclude power firms and ships.

In March, core machinery orders including mobile handsets rose 2.9%
m/m, the first rise in two months, while core orders excluding handsets
rose 1.0%, posting the third consecutive monthly m/m rise.

Many economists said the basic trend of machinery orders will not
change much between the existing core order measure and the new one, as
orders for mobile handsets account for only around 9% of the existing
core orders.

They also said the March 11 earthquake disaster has not had a major
effect on Japanese firms’ appetite for capital investment. In fact,
reconstruction efforts should raise demand.

Another piece of data released recently supports the median
forecast.

Orders for machine tools in the domestic market, which are seen as
a leading indicator for core machinery orders, rose a revised 50.1% y/y
in April, after rising 66.1% in March, according to data released by
Japan Machine Tool Builders’ Association.

Looking ahead, Yoshiki Shinke, senior economist at Dai-Ichi Life
Research Institute, said, “Machinery orders will remain on an uptrend,
as demand for reconstruction of quake-hit areas will emerge now.”

Economists are focusing on the outlook of the new core machinery
order measure for April-June, which will be released together with the
April data on Monday.

New core machinery orders, excluding demand from electric utilities
and for ships as well as mobile handsets, rose 5.6% q/q in
January-March, after -4.3% in Q4 of 2010 and +5.6% in Q3 of 2010.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

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