Japan core machinery orders rise

Japan is heavily reliant on foreign demand

Japan's core machinery orders climbed in June, figures show, but the country's manufacturers are downbeat about their prospects.

Core machinery orders - seen as a key, if volatile, indicator of corporate spending - increased by 9.7% from May to 732.8bn yen ($7.5bn; £4.4bn).

This was the biggest rise in four months and above forecasts of 2.9%.

But analysts warned against being too optimistic as a survey of manufacturers signalled a downbeat outlook ahead.

Manufacturers expect orders to drop in the quarter to September compared with the three months before, a survey by the Cabinet Office showed.

'Cautious'

"A recovery in capital spending won't be assured unless production picks up in a lasting way, which depends largely on how final demand in the Western markets recovers," said Yasukazu Shimizu, an economist at Mizuho Securities.

The latest figures were boosted by one-off orders from the metal sector, the Cabinet office said. Without this element, orders were broadly in line with forecasts.

Junko Nishioka, head Japan economist at RBS Securities said: "The stance on capital spending is very cautious due to the weak demand outlook, including foreign demand."

As demand overseas and in Japan remains limited, Japanese firms - which are heavily reliant on foreign demand - are expected to keep spending low.