Japan's machinery orders drop 3.3% in April

13:23, June 13, 2011      

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Japan's core machinery orders dropped a seasonally adjusted 3.3 percent in April from the previous month, due to damage to factories and supply chain disruptions caused by the March 11 twin disasters, the Cabinet Office said in a report on Monday.

According to the government data, which excludes volatile shipbuilding and power companies, orders in the recording period totaled 711.9 billion yen (8.86 billion dollars), dropping from 777.6 billion yen logged a month earlier.

The Cabinet Office said a number of machinery orders were canceled due to firms' pessimistic outlook for the economy after the earthquake and tsunami ravaged the northeast of Japan and an ensuing and ongoing nuclear crisis amplified the dire situation.

Manufacturers' orders declined 2.7 percent, marking the second straight month of retraction, totaling 319.4 billion yen, while orders from non-manufacturers climbed 2.9 percent to 405.8 billion yen, marking the fourth straight monthly run of gains, the government said.

Machinery orders are a key advance indicator for corporate capital spending and the government uses the data to predict the strength of business spending in a six to nine month period ahead. Such business investment accounts for roughly 15 percent of Japan' s gross domestic product. (1 U.S. dollar is equivalent to 80 yen)

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