The Straits Times
Published on Oct 11, 2012

Japan machinery orders slide more than expected


TOKYO (Reuters) - Japan's core machinery orders fell more than expected in August after two straight months of gains, a sign that Europe's debt crisis and weakening exports to China are beginning to sap corporate appetite to spend.

The data bodes ill for the world's third-largest economy, which has been relying on resilience in private consumption and capital expenditure to support growth even as the global slowdown hurts exports.

Weakness in corporate capital spending adds pressure on the Bank of Japan to ease monetary policy again at its next policy-setting meeting on Oct. 30, when it is set to cut its long-term economic forecasts and admit that it may be several more years before the central bank's target of 1 percent inflation can materialise.

Japan's capital spending has been lacking momentum as companies put off business expenditures because of uncertainty over global growth prospects, while the BOJ's key tankan survey showed this month big firms expect capital expenditure to rise 6.4 percent in the year to next March.