WRAPUP 1-Japan machine orders fall shows slow capex recovery

* Machinery orders fall for 2nd straight month in February

* Govt keeps view that capex levelling off

* Corporate bankruptcies down, service-sector mood up in
Feb

* Current account in surplus for 13th month as exports jump

* Exports seen supporting economy while domestic demand
weak
(Adds data, analyst quotes, details)

By Tetsushi Kajimoto

TOKYO, April 8 (BestGrowthStock) – Japanese core machinery orders
fell unexpectedly in February, the second month of declines,
but they appeared to be bottoming out, pointing to a further
improvement in economic growth.

Underlining the view that the economy is slowly on the mend
from its worst recession in decades, corporate bankruptcies
fell for the eighth month and sentiment in the service
industries hit its highest in three years.

In addition, the current account surplus rose almost a
third from a year earlier due to a record annual gain in
exports, driven by rising shipments to China.

Analysts said the surprise drop in core machinery orders, a
highly volatile series and a leading indicator of capital
spending, may be a one-off, adding that they have bottomed out.

“There’s no need to alter the view that machinery orders
are turning towards a moderate recovery even though the
negative surprise was caused by sluggishness among
non-manufacturers,” said Yoshimasa Maruyama, an economist at
Itochu Corp.

“But recovery in overall orders is unlikely to pick up pace
at least until later this year as non-manufacturers are hit
hard by deflation and lagging behind manufacturers who can
benefit more from exports.”
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Graphic on machinery orders http://link.reuters.com/suf86j
More stories on Japan’s economy [ID:nECONJP]
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Core private-sector machinery orders fell 5.4 percent in
February, against a median forecast for a 3.7 percent rise.

The core orders, which exclude those for ships and
machinery at electric power firms, were 7.1 percent lower than
the same month last year, with a 2.0 percent increase expected.

Orders from manufacturers fell 0.3 percent, with materials
industries such as steel and chemicals putting a drag on the
figure. Orders from non-manufacturers fell 4 percent due to
lower orders from wholesalers, retailers and information
services.

TOO ROSY VIEW?

The Bank of Japan kept monetary policy unchanged on
Wednesday and made slightly more upbeat comments about capital
expenditure and the economy. [ID:nTOE63600E]

But some analysts say the machinery orders data may not go
down well with the central bank’s argument.

“The BOJ has raised its view on the economy which it says
is showing some signs of self-sustained recovery, but that
sounds a little too rosy when we look at data like today’s,”
said Takeshi Minami, chief economist at Norinchukin Research
Institute.

“Deflation remains the focal point in monetary policy, so
the central bank will have no choice but to lean towards easing
as long as it cannot see a way out of deflation.”

The Cabinet Office stuck to its opinion of machinery
orders, saying they are levelling off. Officials remain
cautious on the outlook.

The BOJ’s latest tankan showed on April 1 that big firms
plan to cut capital spending, a driver of the economy, by 0.4
percent in the fiscal year that started on April 1, against a
planned 14.2 percent drop in the previous year. [ID:nTOE61E037]

The current account surplus rose 29.6 percent in February
from a year earlier to 1.47 trillion yen ($15.8 billion), less
than the median estimate for a 42.8 percent annual rise. It has
been in surplus for 13 months.

Japan had a spotty recovery from recession, but economists
say exports are likely to underpin growth this year.

Penny Stocks
($1=93.27 Yen)
(Additional reporting by Hideyuki Sano; Editing by Jan
Dahinten)

WRAPUP 1-Japan machine orders fall shows slow capex recovery