Japan Machinery Orders Rise

123jump.com Staff
10 Mar, 2008
New York City

January machinery orders received by the 280 manufacturers operating in Japan rose by 26.5% to 3.1 trillion yen in January from a 6.8% decline or 2.4 trillion yen in December. Domestic machinery orders, excluding from ships and power companies rose 19.6% to 1.2 trillion. Stocks in Japan fell despite a rise in orders on the ongoing worries related to the health of the U.S. economy. Sumitomo Metal Mining led decliners in the Nikkei 225 index shares with a drop of 10.61%.

[R]5:00AM New York, 7:00PM Tokyo - Machinery orders unexpectedly increased 19.6% in January. Honda Motor Co. plans to build 50 billion yen plant in Japan.[/R]

Stocks in Japan declined despite a government report that showed private sector machinery orders rose by a forecast-beating 19.6% in January as worries that the U.S. is in recession and declining commodity prices weighed on market sentiment.

Market Sentiment

In Tokyo trading Nikkei 225 fell 1.96% or 250.67 at 12,532.13, and the broader Topix Index declined 1.9% or 23.38 to 1,224.39.

In the first section of the Tokyo Stock Exchange 9.8 billion shares worth 1 trillion yen were traded and in the second section 371 million shares valued at 5 billion yen changed hands.

Of the Nikkei 225 shares 34 gained, 185 declined, and 6 were unchanged. Sumitomo Metal Mining led decliners in the Nikkei 225 index shares with a drop of 10.61% as commodity prices dropped.

Other commodity stocks fell as well. Sumitomo Corp. shed 7.65% and Nippon Mining House dropped 8.82%.

Machinery Orders Rise

The Cabinet Office’s Economic and Social Research Institute reported today on its website that total value of machinery orders received by the 280 manufacturers operating in Japan rose by 26.5% to 3.1 trillion yen in January from a 6.8% decline or 2.4 trillion yen in December.

In the quarter to December, total machinery orders leapt by 2.5% at 7.9 trillion yen from a decline of 3.6% or 7.7 trillion yen in the previous quarter. Total orders are however forecasted to rise 10.2% at 8.7 trillion yen in the three months to March.

Machinery orders for the private sector, excluding private ones for ships and power companies, rose by 19.6% or 1.2 trillion yen in January from a decline of 5.9% worth 1 trillion yen in December. For the quarter to December, machinery orders eased to 0.9% at 3.14 trillion yen from a rise of 2.5% or 3.11 trillion yen in the previous quarter.

In the quarter to March, orders are forecasted to increase by 3.5% at 3.2 trillion yen.

Also machinery orders for manufacturing companies increased by 13.8% in January at 534 billion yen from a 7.8% decline or 472 billion yen a month earlier. Fourth quarter manufacturing orders rose 6.8% at 1.5 trillion yen from 2.7% or 1.4 trillion in previous quarter.

Manufacturing orders in the first quarter of 2008 are expected to increase 1.8% to 1.53 trillion yen.

For the non-manufacturing sector, orders from companies spiked 25.9% to 682 billion yen from a 5.2% decline worth 541 billion yen in December. In the three months to December, orders fell 2.7% at 1.6 trillion yen from a gain of 1.6% or 1.7 trillion yen in the previous quarter.

In addition, non-manufacturing orders in the quarter to March are projected to rise 3.1% to 1.71 trillion yen.

Government machinery orders also climbed 0.8% at 220 billion yen from a 19% slump or 218 billion yen the previous month. In the fourth quarter, orders by the government gained 8.8% or 729 billion yen from a decline of 26.2% at 670 billion yen in the previous quarter.

Government orders are expected to increase by 19.6% to 872 billion yen in the quarter to March.

In January overseas orders jumped by 43.1% to 105 billion yen from a 4.9% drop or 99 billion yen the previous month.

Gainers & Losers

Sky Perfect JSAT led advancers in the Nikkei 225 index shares with a rise of 7.65% followed by increases in Japan Tobacco of 5.08%, in Odakyu Electric Rail of 4.67%, in Toagosei Co. Ltd of 4.46%, and in Mitsui Sumitomo Insurance Co. of 4%.

Domestic related shares increased after the government reported today that machinery orders in Japan rose by 19.6%.

Sumitomo Metal Mining led decliners in the Nikkei 225 index shares with a drop of 10.61% followed by losses in Toho Zinc Co. Ltd of 10.09%, in Sumitomo Metal Industries of 9.71%, in Sojitz Corp. of 9.52%, and in Sanyo Electric Power of 9.40%.

Sumitomo Metal Industries and other commodity stocks declined after copper prices declined by 0.7%, while platinum price fell the most in 8 years.

Gold prices fell to $972.50 an ounce from a record high of $995.20 on March 5th.

Exporters fell as the yen strengthened to 101.93 from 102.67 against the dollar on Friday last week. The dollar continued to decline against major currencies after the U.S. Labor Department reported on March 7 that employers unexpectedly cut jobs in February for the second consecutive month.

Payrolls in February fell by 63,000 after a revised decline of 22,000 in January.

Honda to build new factory in Japan

AFP reported yesterday that Honda Motor Co. will spend 50 billion yen to build a new complex in the western city of Yokkaichi to build small cars. The company will start operating an engine factory in 2009 and assembly lines around 2010 with an annual output capacity of 240,000 vehicles.

The facilities will be located at a site next to the factory run by small vehicle production subsidiary Yachiyo Industry Co., which will manage the new complex as well.

Steel Partners seeks 33.6% stake

The Nikkei news reported today that Steel Partners says it now wants a 33.3% equity in Sapporo Holdings Ltd. instead of 66.6%, and will offer 875 yen per share for stock in the Japanese beermaker from the previously proposed 825 yen.