Page last updated at 09:38 GMT, Thursday, 15 January 2009

Japan's machinery orders plunge

Toyota car factory
Firms such as Toyota are cutting production and jobs

Japanese machinery orders, seen as a barometer of corporate spending activity, posted their steepest monthly fall on record in November.

Core private sector machinery orders, excluding orders from electric power firms and shipbuilders, fell 16% from October to 754bn yen ($8.4bn; 5.8bn).

It is the fastest rate of decline since the government survey started in 1987.

The news sent the Nikkei stock market index down 5%. Many other major Asian markets also fell steeply.

Hong Kong's Hang Seng Index fell 3.4%, South Korea's Kospi dropped 6%, and markets in Australia, India and Taiwan fell 4% or more. Singapore's main index fell more than 2.5%.

The new Japanese data comes after recent figures showed industrial output in the country dropped 8% in November compared to October, the biggest fall on record.

'Worse than predicted'

The latest figures show businesses are cutting investment in the hope of getting through the country's current recession.

The large decline in machinery orders far outstrips October's 4.4% decline.

After the figures were released the benchmark Nikkei 225 share index fell by nearly 5%.

"Machinery orders were much worse than predicted and this has thrown a shadow over domestic investor confidence. There's a lot of fear about earnings," said Noritsugu Hirakawa, a strategist at Okasan Securities.

Japan's manufacturing exporters have been hit by a fall in demand from overseas, as well as a stronger yen.

Among these are Sony and Toyota, which have both cut production and jobs, and are expected to report weak sales and profits figures for 2008.

Job cuts

Two further Japanese firms added to the air of corporate malaise on Thursday.

Carmaker Nissan said it was cutting domestic production by 64,000 vehicles in February and March to adjust to a reduced global demand.

And Sanyo Electric said it would cut 1,200 jobs in Japan and overseas as it looks to steer its struggling semiconductor operation through the downturn.

"In our semiconductor and related businesses we will cut 800 domestic positions and 400 positions overseas - in total 1,200 - including regular and temporary workers," said Sanyo vice-president Koichi Maeda.

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