Domestic machinery orders in the private-sector in July fell a seasonally adjusted 11.7 percent from the previous month, following a rise of 14.4 percent in June, the Economic Planning Agency said Friday.
The drop was the largest since a 14.3 percent fall in March 1997.
An agency official said July’s retreat was of no concern, as machinery orders are prone to fluctuations and the figures must be seen on a long-term basis.
“There is no cause for worry,” said Yoshihiko Senoo, head of the EPA Business Statistics Research Division. “We are sure that we are continuing to see a general uptrend in machinery orders. There is no reason to change the view we stated last month that we are seeing a recovering trend.”
The core machinery orders, which exclude volatile orders for ships and those from power companies, came to 950.1 billion yen during July.
Orders declined because of the fall in orders in the electrical machinery sector, which dropped 9.8 percent following a surge of 25.9 percent in June, and the telecommunications sector, which fell 19.1 percent after a jump of 33.3 percent.
The drops in these sectors were in reaction to the big gains during the previous month.
Senoo said he expects orders in the electrical machinery and telecom sectors to increase in the coming months.
“There might be some slow movements in the cable business,” he said, “but generally the telecommunications sector will be firm, with demand seen in mobile phones and new-generation equipment.”
He said recovery trends are also seen in the automobile, transport and financial sectors.
It appears, however, that it will be “very difficult” for machinery orders in the July-September quarter to achieve the 10.7 percent growth from the previous quarter that the EPA had earlier projected, Senoo said.
Nonetheless, the EPA is keeping unchanged its view that private-sector capital spending is likely to continue rising through the end of the current fiscal year, he said.
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