Japanese machinery orders hit record low

[Naveed Yaseen]

TOKYO: Japanese machinery orders have fallen to the lowest level on record and thousands of firms have gone bankrupt, data has shown, dampening hopes of a quick recovery in Asia’s biggest economy.

Companies are slashing their investment to try to survive a global economic downturn that has pushed Japan into its worst recession since World War II. Core machinery orders showed a surprise fall of 3.0 per cent in May from the previous month, to 668.2 billion yen (7.1 billion dollars), the lowest level since comparable records began in 1987, the government said.

The orders, a closely watched gauge of planned business investment, have fallen for three straight months, dashing market hopes of a rebound in May. The data threw cold water over the prospects for a swift Japanese economic recovery, said Naoki Murakami, chief economist at Monex Securities.

“It reminds us of the risk that the pace of economic recovery may be very slow due to cutbacks in domestic capital spending by non-manufacturing and other companies,” he said in a report.

Core orders, which exclude volatile demand from power firms and for ships, are expected to fall 5.0 per cent in the three months to June from the previous quarter, the government said. “Capital investment is likely to stay weak for some time,” warned Credit Suisse economist Satoru Ogasawara.

In June 1,422 firms went bankrupt in Japan with debts of 10 million yen or more, up 18.2 per cent from May and the highest level for the month since June 2002, according to a survey released Wednesday. For the first half of 2009, corporate failures totalled 8,169, the most for the January-June period in six years, according to the survey by Tokyo Shoko Research.

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