Monday, June 13, 2011

Japan core machinery orders fall due to power shortages

One of the machine manufacturers in Japan
BBC - Japan's recovery from the earthquake and tsunami continues to be hampered by the disruption to power supplies.
Core machinery orders in Japan fell by 3.3% in April, compared with the previous month, the latest data from the cabinet office shows.
Analysts said the data showed that the recovery in Japan remains volatile in the wake of power shortages.
Machinery orders are a key indicator of companies' capital spending and expansion plans.
"We have power shortage issues which are going to stay for a long time," said Yuuki Sakurai of Fukoku Capital Management.
Mr. Sakurai said that even if companies were to buy new machinery, they would not be able to utilize it fully because of power supply problems - so they may use their capital in other areas.
He added that as the summer season reaches its peak, things are likely to get worse.
"If they are trying to save power, we may even grow as a lower-than-expected rate," he said.
"This is not a steady recovery," he added.

Vocabulary Words: Read the vocabulary words . Make your own sentence using the vocabulary word/s afterwards.
hamper (v.): to prevent the progress
disruption (n.): interruption of normal work or practice
cabinet office (n.): an agency/department of the government
volatile (adj.): tending to vary often or widely, as in price
in the wake (idiom): as a consequence of something

indicator (n.): a data/something that provides information that could predict the state of the economy
utilize (v.): consume or use


Comprehension check: Answer the questions based on the article.
1. What is the current situation of the machinery industry in Japan?
2. What will happen if companies will buy new machineries?
3. What is(are) the key indicator of companies' capital spending and expansion plans?


Follow-up:
1. What could be the solution to this problem?
2. After the tsunami and earthquake in Japan, what have been the common problems of companies aside from power shortages?
3. Mr. Sakurai said that as the summer season reaches its peak, things are likely to get worse. Why do you think he said that?

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