Japan's core machinery orders fall

It is becoming increasingly questionable whether Japan can shrug off a US recession.

On Wednesday, the government reported that its index of leading economic indicators rose to 40.0 in December from 18.2 in November but remained below the 50 mark.

Yesterday, Reuters reported additional evidence of weakness for the Japanese economy.

Japan's core machinery orders fell more than expected in December and an index that gauges service sector sentiment declined to a six-year low, adding gloom to the outlook for the world's second-largest economy...

Core private-sector machinery orders, a highly volatile series known as an indicator of capital spending in the coming six to nine months, fell 3.2 percent in December from the previous month.

That was a bigger fall than economists' consensus forecast for a 0.9 percent drop and followed a 2.8 percent decline in November.

Manufacturers surveyed by the government forecast that core orders will show a 3.5 percent rise in January-March from the previous quarter after a 0.9 percent rise in October-December...

A survey of service sector workers, called "economy watchers" for their proximity to consumer and retail trends, produced an index of 31.8 in January, down from 36.6 in December and the lowest since December 2001.

Meanwhile, though, bank lending and money supply continued to grow.

Separate data on Friday showed that Japanese bank lending rose 0.4 percent in January from a year earlier, with the pace of growth picking up from a 0.1 percent rise in December, according to the Bank of Japan.

The most widely watched measure of money supply -- M2 plus certificates of deposit -- rose 2.1 percent in January from a year earlier, in line with economists' consensus forecast, other BOJ data showed.