Further signs emerge of Japan’s recovery slowdown
TOKYO: Fears that Japan's recovery is heading for further slowdown deepened Wednesday as data showed the nation's trade with the world rose only slightly and a corporate spending indicator fell in October.
The health of the tradereliant economy continues to draw concern as exports, its main engine for growth, slow because of a strong yen and waning overseas demand while domestic demand remains soft.
Japan's economic fiscal policy minister Banri Kaieda told reporters Wednesday that he expected growth to be "substantially lower" in the fourth quarter.
The current account surplus-the broadest measure of trade with the rest of the worldwidened 2.9 percent in October from a year earlier to 1.44 trillion yen (17.20 billion dollars), missing expectations of a 7.0 percent rise.
In September the surplus rose 24.3 percent.
Other data from the finance ministry showed core private-sector machinery orders, a leading indicator of corporate capital spending, fell 1.4 percent in October from the previous month, the second consecutive decline after a 10.3 percent fall in September.
The data also missed expectations of a 0.1 percent decline. Wednesday's data illustrated that the double whammy of the expiration of government subsides for automobiles and other goods and slowing US, European and Chinese demand continued to threaten Japan's economy, said analysts.
"The next couple of quarters are likely to be tough for Japan, as expiring incentives for purchases of consumer durables hurt demand," noted Richard Jerram of Macquarie Bank.
"Stalling exports and a soft industrial cycle will erode corporate profitability and damage the manufacturing investment cycle."
However, Jerram pointed out that robust Japanese machinery export orders indicated an acceleration of economic activity in the region and may help soften the blow for Japan. "If exports can show some modest growth then Japan should be able to avoid recession", he said.
Recent data showed October exports grew at their slowest pace of the year after the yen traded at 15-year highs against the dollar, hammering the competitiveness of the crucial sector. "The yen's strength has also weighed on corporate sentiment," Norio Miyagawa, an economist at Mizuho Securities Research & Consulting, told Dow Jones Newswires.
"Which in turn has played a role in keeping the capital expenditure improvement still rather mild." -Afp