Business

Published: 09 Jun 2009 17:55:26 PST

* Machinery orders slide in April, capex seen still weak

* Lumbered with spare capacity, firms not seen investing

* Wholesale price slide speeds up, deflation pressure rising

By Leika Kihara

TOKYO, June 10 (Reuters) – Japan’s core private-sector machinery orders slid in April, suggesting firms have yet to decide whether a bounce in industrial output and exports will be sustained enough to resume capital investment.

While there are growing signs the worst of the global economic crisis may be past, a 5.4 percent slide in sales of such factory equipment in Japan in April is further evidence that any recovery will be slow.

Adding to deflationary pressures, a 5.4 percent slide in wholesale prices in the year to May — the biggest annual fall in 22 years — showed weak demand was increasingly a problem.

“The orders data doesn’t undermine the view that Japan’s economy has bottomed out and exports are showing signs of recovery,” said Chotaro Morita, chief fixed-income strategist for Barclays Capital in Japan.

“But given that capital spending will likely remain low due to oversupply and a cautious corporate outlook for investment, the orders data suggests that the economic cycle of exports leading to production, spurring investment and consumption may be weaker this time than usual.

The second monthly fall in core orders was much weaker than the median market forecast for a 0.4 percent rise in April, but the monthly series is a very volatile leading indicator of capex spending. Core orders exclude ships and utility purchases.

Still, orders are running one-third lower than a year ago, with many companies not seeing a need to increase capital spending with capacity utilisation barely above 60 percent.

Japanese factories had been running above 100 percent of capacity before the collapse of Lehman Brothers jolted global financial markets in September last year, and ended a strong run in capital expenditure that had been a key component of economic growth.

While global policymakers have suggested the bottom of the economic crisis has passed, no one is forecasting a strong rebound and analysts say the recovery signs are still tentative.

“It’s too early to say the economy will continue to improve after autumn, when the impact of government stimulus starts to fade,” said Credit Suisse economist Satoru Ogasawara.

Stocks shrugged off the weak data, with tech stocks leading the Nikkei share average up 0.5 percent after an improved outlook for Texas Instruments boosted Wall Street.

Shares in Komatsu, the world’s second-largest maker of earth-moving equipment, rose 1.6 percent.

But in another sign of investor uncertainty, the dollar fell broadly in U.S. trade on Tuesday as questions grew about the strength of any U.S. recovery.

Similarly, analysts say any recovery by Japan from its worst recession since World War Two will be fragile as companies slash jobs, adding to already weak domestic demand.

While price falls have largely come from falling commodity prices, signs of weak demand is evident in falling final goods prices.

Final domestic goods prices fell 2.1 percent in the year to April, pointing to further pressure on consumer prices, which have entered their second bout of mild deflation this decade.

Core consumer prices started falling in the year to March, and both the Bank of Japan and economists expect at least two years of deflation. But opinions are divided about whether this will be mild or a more serious slide that prompts consumers to curb spending.

Revised government data on Thursday is expected to show the Japanese economy contracted 4.0 percent in the first quarter, the biggest contraction since World War Two.

However, analysts expect the economy to grow 0.5 percent in the current quarter — the first rise in gross domestic product after four straight quarters of contraction.

Bank of Japan Governor Masaaki Shirakawa on Tuesday endorsed the view that the worst period for the economy seemed to be over, although he cautioned that Japan was still in the midst of an unprecedented financial crisis. (Additional reporting by Hideyuki Sano; Writing by Rodney Joyce; Editing by Hugh Lawson)

Published: 08 Apr 2009 18:27:19 PST

TOKYO, April 9 – Japan’s core private-sector machinery orders unexpectedly rose 1.4 percent in February from the previous month, data showed on Thursday, a rare positive sign as the country suffers its worst recession since World War Two.

It was the first rise in five months and compared with a median market forecast for a 6.7 percent fall.]

With companies forced to slash production in the face of dwindling exports, core orders, a leading indicator of corporate capital spending that tends to be volatile, fell 30.1 percent from a year earlier.

Published: 29 Mar 2009 19:09:39 PST

Acme Machinery is seeking to supply local companies in Swaziland, Southern Africa with printing and paper box making machinery. The company, which manufactures paper printing and converting machinery, has sought the assistance of the Swaziland Investment Promotion Authority (SIPA) to help it develop its brand as well as solicit potential buyers.

Hemang Shah, MD, Acme Machinery said that ACME was immensely popular with the packaging industry in India as well as abroad, having started operations in 1961. It started off by catering mainly to varied printing press and later to the packaging industry as well, around India.

“The company has rapidly expanded the product range along with the infrastructure for manufacturing facility, with the help of top grade engineering practices and stringent quality standards as a hallmark of its products and Acme has earned various prestigious national awards,” he added.

Published: 10 Mar 2009 18:15:42 PST

TOKYO, March 11 – Japan’s core private-sector machinery orders, a key gauge of corporate capital spending, fell 3.2 percent in January from the previous month, slightly better than a median market forecast for a 4.5 percent fall, government data showed on Wednesday.

With companies forced to slash production in the face of dwindling demand due to the global recession, orders fell 39.5 percent from a year earlier, against a median forecast for a 40.0 percent decline.

Published: 25 Feb 2009 18:28:44 PST

Machine tools orders increased 36%

In 2008, according to the U.S. Department of Commerce, the value of U.S. imported Italian machinery for major capital goods sectors registered a total value of over $2.2 billion, reflecting a 4.4% increase over the previous year ($2.1 billion.)

More Machinery News: Excise, service rates cut to boost Indian demand Whirlpool, others face compressor industry probe Asia diesel market seen going from bad to worse Renault seeks engine development partners Terex posts loss on charges, sees ‘09 sales down 30-35 pct

Italy is the

Published: 08 Feb 2009 18:44:34 PST

TOKYO, Feb 9 – Core Japanese machinery orders fell 1.7 percent in December, far less than expected, although economists say corporate capital spending remains very weak as the global economic crisis shows no sign of letting up.

The nation’s banks, less damaged than their western peers from the market turmoil, increased their lending by the most on record in January, as companies turn to their bankers in the face of a seized up credit market.

Japan, along with the United States and the euro zone, are in recession as the global financial crisis cuts exports, triggering cuts in production and jobs. Japan’s current account surplus slid 92 percent in December from a year earlier.

While the fall in machinery orders was only one-fifth that expected by the market, analysts took little joy from it, saying there were one-off factors in the steel sector that would not be sustained.

The cash value of orders was at its lowest since 1987.

“Although the headline figure was better than expected, we cannot be optimistic given the sharp deterioration of the previous month and two straight quarters two-digit falls,” said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute.

“Japan’s capital expenditure will be significantly weaker in 2009 largely due to a deterioration of external demand.

Japan’s Nikkei average rose 1.3 percent on Monday, buoyed by exporters such as Honda Motor Co on a weaker yen and amid hopes for economic stimulus measures by the U.S. government to bolster the economy.

Shares of machinery makers such as Komatsu Ltd rose, helped in part by the less-than-expected fall in machinery orders.

The fall in core private-sector machinery orders, a leading indicator for corporate capital spending, was much smaller than the median forecast from economists for an 8.8 percent fall.

In October-December, core orders, which exclude those for ships and machinery at electric power firms, fell 16.7 percent, the sharpest quarterly fall on record.

Many companies including Toyota Motors, which had been expanding production capacity to take advantage of robust growth in emerging markets until several months ago, have been forced to cut production as they face unprecedented losses.

That has led to a sharp drop in industrial output. Data due next week is expected to show that Japan’s economy likely shrank at its fastest pace since 1974 in the final three months of 2008, a Reuters poll shows.

With much of the developed world seen contracting at least until the next quarter, many economists expect the Japanese economy to only start a slow recovery later this year.

“The economy may start growing in the latter half of this year but we can’t expect it to achieve its potential growth rate, probably until the year after next,” said Hiroshi Shiraishi, an economist at BNP Paribas.

“If the economy is still contracting later this year, it may be falling into a deflationary spiral.”

The mounting gloom over the economy has been putting strains on financial markets, widening credit spreads sharply and making it difficult for companies with low credit ratings to issue debts in markets.

That led bank lending to rise 3.7 percent in January from a year earlier, Bank of Japan data showed.

Following a slight downward revision in December data, January’s increase from a year earlier was the largest since the Bank of Japan started publishing the data in 2000.

The outstanding balance of commercial paper held by banks fell 10.1 percent in January from a year earlier after a 15.0 percent drop in December, reflecting the problems in credit markets.

The pace of fall slowed from the past few months after the BOJ said it would buy 3 trillion yen ($32.6 billion) of commercial paper by the end of March.

Wary of mounting woes for Japan’s economy, the BOJ has nudged interest rates near zero and decided to buy commercial paper, corporate bonds and shares held by banks to ease credit strains.

Senior BOJ officials, including board member Atsushi Mizuno, has signalled that the central bank was ready to examine further steps to support the economy and ensure financial stability.

Published: 15 Jan 2009 00:47:29 PST

TOKYO, Jan 15 – Japan’s core machinery orders fell a record 16.2 percent in November as companies slashed spending in the face of a global economic slump and a growing risk of a return to deflation at home.

Data also showed growth in wholesale prices slowing to a four-year low in December and companies charging each other less for final consumer goods than a year earlier.

“Wholesale inflation is slowing now mainly due to declines in raw material costs. Weak demand may add to the downward pressure on prices in the months ahead,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“There’s a good chance wholesale prices will start falling year-on-year sometime in the January-March quarter.”

The drop in core private-sector machinery orders, a leading indicator of corporate capital spending, was double the median market forecast for an 8.1 percent fall and bigger than the previous record decline of 15.9 percent in July 2006.

The value of core orders was the lowest since July 1987 at 754.2 billion yen ($8.5 billion).

The global slowdown has hit Japanese factories hard, with big firms such as car maker Toyota Motor Corp and electronics firm Sony Corp slashing output and jobs, deepening the recession in the world’s No.2 economy.

Falling oil and other commodity prices have eased costs for Japanese firms, but have stoked fears that price falls and weak demand could feed each other in a vicious deflationary spiral.

The final price companies charge each other for goods fell 2.6 percent from a year earlier, a rough guide to likely pressure on prices in stores, and some see consumer inflation turning negative.

“I think core consumer prices will fall this year. It’s going to start falling by the middle of year at latest,” said Seiji Adachi, a senior economist at Deutsche Securities.

BONDS UP, SHARES SLIDE

The weak machinery orders data pushed up the lead 10-year Japanese government bond futures to a four-month high of 140.19. The Nikkei share average fell 4.9 percent to a 1-month closing low as the grim data dented investor confidence.

The meltdown of global financial markets has pushed the United States, Japan and the euro zone into recession and slowed growth in China and other emerging economies.

Many economists expect Japan’s export-reliant economy to keep shrinking at least until the first quarter this year — four consecutive quarters of decline and the longest such slide on record — as manufacturers cut output as global demand plunges.

A Japanese newspaper reported on Thursday that the Bank of Japan will examine the possibility of buying corporate bonds outright to ease credit strains.

But many economists doubt the BOJ will take such steps immediately after rates on commercial paper slid following its rate cut and announcement last month that it would buy such paper. The BOJ’s policy board next meets on Jan. 21-22.

Deepening economic troubles are expected to prompt the European Central Bank to cut interest rates on Thursday for the fourth month running.

DEFLATION RISK RISING

Fuelling worries among some economists that deflation could return to haunt the economy, annual wholesale inflation slowed to 1.1 percent in December, above a median market forecast for 0.9 percent but less than half the 2.8 percent rise seen in the year to November.

It was the lowest level of wholesale inflation since May 2004 and prices fell sharply in the month, prompting some analysts to warn that deflation in wholesale prices loomed.

The index on domestic final consumer goods, sometimes seen as a proxy to consumer price trends, fell 2.6 percent in December from a year earlier.

Japan began suffering mild deflation from 1998, with some economists saying it ended in 2006 due to a recovery in the economy. But the economy slipped into recession last year.

While many economists expect core consumer prices to turn negative in the coming months, few see a return to prolonged deflation.

Published: 15 Jan 2009 00:47:11 PST

TOKYO, Jan 15 – Core Japanese machinery orders fell a record 16.2 percent in November to a two-decade low, in another sign that the global crisis has stalled capital investment, while wholesale inflation hit a four-year low, highlighting the risk of deflation.

The global slowdown has hit Japanese factories hard, with big firms such as car maker Toyota Motor Corp and electronics firm Sony Corp slashing production and cutting jobs, deepening the recession in the world’s No.2 economy as export orders dry up.

Falling oil and other commodity prices have eased costs for Japanese firms, but have stoked fears that price falls and weak demand could feed each other in a vicious deflationary spiral.

“Companies are forced to overhaul their capital investment plans as demand from emerging economies, which it had been hoped would make up for a slowdown in rich nations, is falling at an unexpected pace,” said Hiroshi Shiraishi, an economist at BNP Paribas. “Machinery orders will likely remain very weak for a considerable period.”

The drop in core private-sector machinery orders, a leading indicator of corporate capital spending, was double the median market forecast for an 8.1 percent fall and bigger than the previous record decline of 15.9 percent in July 2006.

The value of core orders was the lowest since July 1987 at 754.2 billion yen ($8.5 billion).

The final price companies charge each other for goods fell 2.6 percent from a year earlier, a rough guide to likely pressure on prices in stores, and some see consumer inflation turning negative.

“I think core consumer prices will fall this year. It’s going to start falling by the middle of year at latest,” said Seiji Adachi, a senior economist at Deutsche Securities.

BONDS UP, SHARES SLIDE

The weak machinery orders data pushed up Japanese government bond prices, with the lead 10-year JGB futures hitting a four-year high of 140.19, and helped push Tokyo’s Nikkei share average down more than 4 percent.

The Tokyo stock market’s machinery shares subindex fell more than 3 percent, with shares in Komatsu, the world’s second-biggest earth-moving equipment maker, sliding 4.8 percent as the bleak data added to a wider decline in stocks due to growing fears about the state of the U.S. economy.

The meltdown of global financial markets has pushed the United States, Japan and the euro zone into recession and slowed growth in China and other emerging economies, battering Japan’s key export destinations.

Many economists expect Japan’s export-reliant economy to keep shrinking at least until the first quarter this year — four consecutive quarters of decline and the longest such slide on record — as manufacturers cut output as global demand plunges.

A Japanese newspaper reported on Thursday that the Bank of Japan will examine the possibility of buying corporate bonds outright to ease credit strains.

But many economists doubt the BOJ will take such steps immediately after rates on commercial paper slid following its rate cut and announcement last month that it would buy such paper.

DEFLATION RISK RISING

Fuelling worries among some economists that deflation could return to haunt the economy, annual wholesale inflation slowed to 1.1 percent in December, above a median market forecast for 0.9 percent but less than half the 2.8 percent rise seen in the year to November.

It was the lowest level of wholesale inflation since May 2004 and prices fell sharply in the month, prompting some analysts to warn that deflation in wholesale prices loomed.

“Wholesale inflation is slowing now mainly due to declines in raw material costs. Weak demand may add to the downward pressure on prices in the months ahead,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“There’s a good chance wholesale prices will start falling year-on-year sometime in the January-March quarter.”

The index on domestic final consumer goods, sometimes seen as a proxy to consumer price trends, fell 2.6 percent in December from a year earlier.

Japan began suffering mild deflation from 1998, with some economists saying it ended in 2006 due to a recovery in the economy. But the economy slipped into recession last year.

While many economists expect core consumer prices to turn negative in the coming months, few see a return to prolonged deflation. ($1=88.99 Yen)

Published: 15 Jan 2009 00:40:46 PST

(Corrects 9th paragraph to… a four-month high … not … a four-year high. The same error occrurred in the previous update) (Adds details, comments)

TOKYO, Jan 15 – Core Japanese machinery orders fell a record 16.2 percent in November to a two-decade low, in another sign that the global crisis has stalled capital investment, while wholesale inflation hit a four-year low, highlighting the risk of deflation.

The global slowdown has hit Japanese factories hard, with big firms such as car maker Toyota Motor Corp and electronics firm Sony Corp slashing production and cutting jobs, deepening the recession in the world’s No.2 economy as export orders dry up.

Falling oil and other commodity prices have eased costs for Japanese firms, but have stoked fears that price falls and weak demand could feed each other in a vicious deflationary spiral.

“Companies are forced to overhaul their capital investment plans as demand from emerging economies, which it had been hoped would make up for a slowdown in rich nations, is falling at an unexpected pace,” said Hiroshi Shiraishi, an economist at BNP Paribas. “Machinery orders will likely remain very weak for a considerable period.”

The drop in core private-sector machinery orders, a leading indicator of corporate capital spending, was double the median market forecast for an 8.1 percent fall and bigger than the previous record decline of 15.9 percent in July 2006.

The value of core orders was the lowest since July 1987 at 754.2 billion yen ($8.5 billion).

The final price companies charge each other for goods fell 2.6 percent from a year earlier, a rough guide to likely pressure on prices in stores, and some see consumer inflation turning negative.

“I think core consumer prices will fall this year. It’s going to start falling by the middle of year at latest,” said Seiji Adachi, a senior economist at Deutsche Securities.

BONDS UP, SHARES SLIDE

The weak machinery orders data pushed up Japanese government bond prices, with the lead 10-year JGB futures hitting a four-month high of 140.19, and helped push Tokyo’s Nikkei share average down more than 4 percent.

The Tokyo stock market’s machinery shares subindex fell more than 3 percent, with shares in Komatsu, the world’s second-biggest earth-moving equipment maker, sliding 4.8 percent as the bleak data added to a wider decline in stocks due to growing fears about the state of the U.S. economy.

The meltdown of global financial markets has pushed the United States, Japan and the euro zone into recession and slowed growth in China and other emerging economies, battering Japan’s key export destinations.

Many economists expect Japan’s export-reliant economy to keep shrinking at least until the first quarter this year — four consecutive quarters of decline and the longest such slide on record — as manufacturers cut output as global demand plunges.

A Japanese newspaper reported on Thursday that the Bank of Japan will examine the possibility of buying corporate bonds outright to ease credit strains.

But many economists doubt the BOJ will take such steps immediately after rates on commercial paper slid following its rate cut and announcement last month that it would buy such paper.

DEFLATION RISK RISING

Fuelling worries among some economists that deflation could return to haunt the economy, annual wholesale inflation slowed to 1.1 percent in December, above a median market forecast for 0.9 percent but less than half the 2.8 percent rise seen in the year to November.

It was the lowest level of wholesale inflation since May 2004 and prices fell sharply in the month, prompting some analysts to warn that deflation in wholesale prices loomed.

“Wholesale inflation is slowing now mainly due to declines in raw material costs. Weak demand may add to the downward pressure on prices in the months ahead,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“There’s a good chance wholesale prices will start falling year-on-year sometime in the January-March quarter.”

The index on domestic final consumer goods, sometimes seen as a proxy to consumer price trends, fell 2.6 percent in December from a year earlier.

Japan began suffering mild deflation from 1998, with some economists saying it ended in 2006 due to a recovery in the economy. But the economy slipped into recession last year.

While many economists expect core consumer prices to turn negative in the coming months, few see a return to prolonged deflation. ($1=88.99 Yen)

Published: 04 Jan 2009 21:45:02 PST

‘Entrepreneurs have always analysed the world through a different looking glass’ goes an old adage. Starting up a business from ground zero is not an easy task, especially not in the cutthroat world of the plastics machinery industry. However, as a first generation entrepreneur, S V Kabra, chairman and managing director, Kabra Extrusiontechnik Ltd (KET) had a clear vision of how he would pave his way towards becoming the largest manufacturer of plastics extrusion machinery in India with the establishment of Kolsite in 1963, when plastics industry itself was at a nascent stage. An economics graduate from Mumbai University, Kabra believed in not only doing different things, but in doing things differently. Today, with more than four decades of expertise, Kabra is revered by the industry as one of the stalwarts in plastics extrusion. In an exclusive conversation with Sundeep Nadkarni, Kabra speaks at length about the various facets of the plastics extrusion industry in India and abroad, while highlighting KET’s plans for the near future (especially Plastindia). Excerpts…

Current scenario of plastics machinery industry…

The market for the plastics machinery worldwide is about $ 1.5 billion, of which injection moulding constitutes a major chunk in terms of number and value. This is followed by extrusion, blow moulding, rotational moulding and other processes, in that particular order. But in terms of processing raw materials (in terms of tonnage), extrusion comprises about 60 per cent of plastics processing, with its main usage being films that are used in packaging, pipes, profiles, raffia, etc.