/www.bloomberg.com/ By Kanako Chiba and Daisuke Takato
Tokyo, Nov. 11 (Bloomberg) -- Japanese machinery orders fell last quarter as slumping exports prompted companies such as Advantest Corp. to curb investment.
Machinery orders, an early indicator of business investment, fell 1.7 percent last quarter from the previous three-month period, seasonally adjusted, government figures showed. In September, orders rose 12.7 percent from the previous month after dropping 13.6 percent in August.
The world's second-largest economy is counting on investment by its companies to power growth as falling wages and job cuts shake consumer confidence and spending, economists said. A rebound from the third recession in a decade may be cut short by slowing growth in the U.S., Japan's biggest overseas market.
``We could see business spending start losing its strength as early as the beginning of next year,'' said Yasukazu Shimizu, a senior economist at Aozora Bank Ltd. ``Companies are trying not to take risks and invest. Instead, they're trying to protect their capital.''
The No. 243 bond, which carries a 1.1 percent coupon and matures in 2012, rose 0.318 to 101.303 as of 2:35 p.m. in Tokyo. Its yield fell 3.5 basis points to 0.955 percent, matching the lowest since Nov. 25, 1998. A basis point is 0.01 percentage point.
In August, machinery orders had their biggest drop in five years, falling to the lowest level in 15 years.
``September's increase was a rebound from August's big decline,'' said Tatsuya Torikoshi, a senior economist at Daiwa Institute of Research.
Job Cuts
Falling sales prompted Advantest, the world's biggest maker of memory-chip testing equipment, to cut 600 jobs after announcing a loss in the six months to Sept. 30. Equipment sales will probably fall in the fiscal second half, the company said.
U.S. growth will slow to a 2.2 percent annual rate this quarter from an expected 3.6 percent pace in the third quarter as consumer spending cools, according to a consensus estimate of economists surveyed by Blue Chip Economic Indicators.
``The outlook is quite grim,'' said Takehiro Sato, an economist at Morgan Stanley Japan Ltd.
Machinery orders account for about two-thirds of business spending, which drove Japan's last economic expansion from February 1999 to October 2000. Capital spending accounts for about 16 percent of the economy.
Japan's economy expanded 0.6 percent in the second quarter, the first growth in more than a year, as exports of goods from cars to computer chips surged. Growth probably slowed to 0.5 percent in the third quarter, according to a Bloomberg News survey of economists.
From a year earlier, machinery orders fell 2.7 percent in September, after dropping 20.3 percent in August. Power utilities and shippers are excluded because their large projects skew the figures.