— See Separate Table For Details Of Individual Forecasts

TOKYO (MNI) – Japan’s core private-sector machinery orders appear
to have posted the first month-on-month fall in two months in September,
down by a seasonally adjusted 7.5% after +11.0% in August and -8.2% in
July, according to the median forecast of economists surveyed by Market
News International.

The Cabinet Office will release September machinery orders data at
0850 JST on Thursday, Nov. 10 (2350 GMT on Wednesday).

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

Economists said an expected drop in September is in payback for an
unexpectedly strong orders in August, which were led by sharp rebounds
in orders for computers and chip-making machines from electrical
machinery makers as well as those from manufacturers of information and
communication electronics equipment.

Core machinery orders are forecast to rise 0.9% in the
July-September quarter, increasing for a third straight quarter after
+2.5% in April-June, the Cabinet Office has said.

Even if September core orders fell 10% on the month, the third
quarter figure would still hit the +0.9% forecast.

Market participants are paying attention to the official forecast
for Q4 orders which will be released with September figures.

Japan’s economy faces both positive and negative factors going
forward.

Yoshiki Shinke, senior economist at Dai-Ichi Life Research
Institute, said, “We can expect a gradual rise in capital investment,
thanks to demand for investment in rebuilding the regions hit by the
(March) earthquake disaster.”

Meanwhile, Takehiro Sato, chief economist at Morgan Stanley MUFG,
said, “Capital investment in the domestic market will be exposed to
lingering downward pressure as electric power supply shortage may occur
nationwide in the winter and a shift of production capacity overseas may
be accelerated if concerns about a stronger yen grow further.”

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

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