Japan export orders hit 6-year high, earnings slip

By Rie Ishiguro

TOKYO (BestGrowthStock) – Japanese export orders jumped to the highest in almost six years in March in a sign the manufacturing segment will likely keep recovering on demand in emerging markets such as China, a survey showed on Wednesday.

But as companies struggled to cope with stagnant domestic demand, Japanese wage earners’ total cash earnings fell for the 21st straight month in February and winter bonuses logged a record drop, government data showed.

“Companies are likely to remain cautious about boosting their capital spending and wages, because they cannot expect a strong recovery in domestic demand over the long term,” said Masamichi Adachi, a senior economist at JPMorgan Securities Japan.

“They will remain reluctant to expand operations within Japan and would rather make and sell products such as automobiles in China,” he said.

The Nomura/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 52.4 in March from 52.5 in February, but remained above the 50 threshold that separates contraction from expansion for the ninth consecutive month.

The index for new export orders, a leading indicator of Japanese exports, rose to 55.7 from 55.2 in the previous month, hitting the highest level since May 2004.

In an example of Japanese companies benefiting from strong demand in China, Komatsu Ltd (6301.T: ), the world’s No.2 maker of earth-moving equipment, saw its machinery sales in China soar 40 percent in the financial year ending on Wednesday.

In March alone, unit sales of Komatsu’s hydraulic excavators and other earth-moving machines in China more than doubled from a year earlier, Komatsu President Kunio Noji told Reuters.

But in a sign that strength in exports is yet to spread broadly in the economy, winter bonus payments in 2009 fell a record 9.3 percent from the previous year to an average 380,258 yen ($4,099), the lowest since the labor ministry’s survey started in 1990.

Wage earners’ total cash earnings fell 0.6 percent in February from a year earlier, down for the 21st straight month.

Japan’s jobless rate has recovered to 4.9 percent after hitting a record high last summer but analysts say the job market recovery will be slow in coming months.

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($1=92.75 Yen)

(Editing by Michael Watson)

Japan export orders hit 6-year high, earnings slip