By Stanley White
TOKYO (Reuters) - Japan's core machinery orders rose less than expected in November, as renewed global growth concerns appeared to temper corporate spending plans and cast fresh doubts over how quickly the economy can recover from recession.
Lacklustre business investment could also be a sign that consumer demand is weak, which could make it difficult for the Bank of Japan to achieve its 2 percent inflation target.
The 1.3 percent increase in core orders, which exclude those of ships and electric power utilities, lagged a 5.0 percent rise forecast by economists in a Reuters poll. It followed a 6.4 percent decline in October.
Japan's policymakers have said consumer spending, corporate profits, capital expenditure and exports will underpin growth this year. However, signs of a slowing global economy, plunging oil prices and a sudden slide in copper prices underscore the challenges to this scenario.
"Capital expenditure has been on the recovery path since the summer last year, but now we are starting to see some signs of caution," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
Weak capital expenditure could cast doubt on Prime Minister Shinzo Abe's argument that his mix of fiscal stimulus, monetary easing and structural reforms is leading to a revival of Japan's hollowed-out manufacturing sector.
After slipping into a recession in the third quarter, the world's third-biggest economy has shown few signs of rebounding strongly as domestic consumption has remained soft.
Offshore developments, including slowing growth in China - Japan's major export market - also is casting doubt about the strength of recovery.
"There are lingering concerns about domestic demand. Some companies may also be worried about a slowdown in China," Tokuda said.
Orders from manufacturers fell 7.0 percent in November, faster than a 5.5 percent decline in the previous month, Cabinet Office data showed.
Compared with a year earlier, core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, tumbled 14.6 percent. The median estimate was for a 5.8 percent annual decline.
The Cabinet Office lowered its assessment of machinery orders, saying the recovery is showing signs of stalling.
Abe is hoping that corporate tax cuts starting next fiscal year will encourage Japanese companies to bring manufacturing capacity back home from overseas markets.
Many policymakers are also encouraged because other surveys show companies plan to increase investment next fiscal year.
However, the tepid rise in machinery orders in November suggests an acceleration in capital expenditure is far from certain, especially also as a slowdown in China and weakness in the euro zone tempers global growth.
