5:00AM New York, 7:00PM Tokyo - Machinery orders unexpectedly increased 19.6% in January. Honda Motor Co. plans to build 50 billion yen plant in Japan.

Stocks in Japan declined despite a government report that showed private sector machinery orders rose by a forecast-beating 19.6% in January as worries that the U.S. is in recession and declining commodity prices weighed on market sentiment.

Market Sentiment

In Tokyo trading Nikkei 225 fell 1.96% or 250.67 at 12,532.13, and the broader Topix Index declined 1.9% or 23.38 to 1,224.39.

In the first section of the Tokyo Stock Exchange 9.8 billion shares worth 1 trillion yen were traded and in the second section 371 million shares valued at 5 billion yen changed hands.

Of the Nikkei 225 shares 34 gained, 185 declined, and 6 were unchanged. Sumitomo Metal Mining led decliners in the Nikkei 225 index shares with a drop of 10.61% as commodity prices dropped.

Other commodity stocks fell as well. Sumitomo Corp. shed 7.65% and Nippon Mining House dropped 8.82%.

Machinery Orders Rise

The Cabinet Office’s Economic and Social Research Institute reported today on its website that total value of machinery orders received by the 280 manufacturers operating in Japan rose by 26.5% to 3.1 trillion yen in January from a 6.8% decline or 2.4 trillion yen in December.

In the quarter to December, total machinery orders leapt by 2.5% at 7.9 trillion yen from a decline of 3.6% or 7.7 trillion yen in the previous quarter. Total orders are however forecasted to rise 10.2% at 8.7 trillion yen in the three months to March.

Machinery orders for the private sector, excluding private ones for ships and power companies, rose by 19.6% or 1.2 trillion yen in January from a decline of 5.9% worth 1 trillion yen in December. For the quarter to December, machinery orders eased to 0.9% at 3.14 trillion yen from a rise of 2.5% or 3.11 trillion yen in the previous quarter.

In the quarter to March, orders are forecasted to increase by 3.5% at 3.2 trillion yen.

Also machinery orders for manufacturing companies increased by 13.8% in January at 534 billion yen from a 7.8% decline or 472 billion yen a month earlier. Fourth quarter manufacturing orders rose 6.8% at 1.5 trillion yen from 2.7% or 1.4 trillion in previous quarter.

Manufacturing orders in the first quarter of 2008 are expected to increase 1.8% to 1.53 trillion yen.

For the non-manufacturing sector, orders from companies spiked 25.9% to 682 billion yen from a 5.2% decline worth 541 billion yen in December. In the three months to December, orders fell 2.7% at 1.6 trillion yen from a gain of 1.6% or 1.7 trillion yen in the previous quarter.

In addition, non-manufacturing orders in the quarter to March are projected to rise 3.1% to 1.71 trillion yen.

Government machinery orders also climbed 0.8% at 220 billion yen from a 19% slump or 218 billion yen the previous month. In the fourth quarter, orders by the government gained 8.8% or 729 billion yen from a decline of 26.2% at 670 billion yen in the previous quarter.

Government orders are expected to increase by 19.6% to 872 billion yen in the quarter to March.

In January overseas orders jumped by 43.1% to 105 billion yen from a 4.9% drop or 99 billion yen the previous month.

Gainers & Losers