Japan machinery orders slip

Afp, Tokyo
Japanese orders for machinery dropped for a second straight month in July, government data showed Thursday, raising further concern about the outlook for the world's second largest economy.Core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, are regarded as a leading indicator of corporate capital spending.Orders fell 3.9 percent in July from the previous month, the Cabinet Office said, following a 2.6 percent fall in June.While the latest figure was better than the market's forecast of a 4.3 percent fall, analysts said it showed companies are wary of boosting capacity at a time of high material costs and slowing exports."Demand overseas keeps falling, and considering the current economic situation, the trend (in machinery orders) is likely to continue," Kyohei Morita, chief Japan economist at Barclays Capital, told Dow Jones Newswires.Orders by manufacturers, such as machinery makers that buy engines and tools, tumbled 10.4 percent in July, the data showed.Machinery orders from non-manufacturers such as farmers and telecommunication firms were down 2.4 percent.Many economists suspect that Japan's economy, Asia's largest, may have slipped into recession after some six years of almost continuous growth.A global economic slowdown, coupled with higher commodity prices, has hit the Japanese economy.