Japan machinery orders drop 14.8% in May, surplus plunges

Japan posted a set of weak economic figures on Monday, underscoring worries about Europe's debt crisis and a slowing Chinese economy will continue to hinder Japan's recovery from last year's earthquake.

Official data from the Ministry of Finance showed that the surplus in Japan's current account plunged 62.6 percent to 215.1 billion yen ($2.7 billion) in May from a year earlier. Machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said, the biggest drop since comparable data were made available in 2005.

Japan’s trade position has weakened due to growing energy imports after last year’s earthquake and nuclear meltdown and also the yen’s gain of 4.9 percent against the dollar since mid- March. Prime Minister Yoshihiko Noda gave approval for a restart of reactors at the Ohi nuclear plant, which resumed power generation last week, to avoid power shortages and rolling blackouts over the summer.
“Today’s machinery order drop is very large, and it may be a signal that Japanese companies are becoming cautious about investment” amid concern about a global economic slowdown, said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management in Tokyo. “Though exports have been slumping, we don’t expect Japan to have any major trade deficit.”