Core machinery orders to Japanese manufacturers in October rose a seasonally adjusted 8.3 percent from the previous month to 1.088 trillion yen on the back of brisk demand from information technology-related sectors, the Economic Planning Agency said Friday.

The rise followed a 16.5 percent plunge in September.

The October figure -- excluding orders from shipbuilders and electric power firms -- was up 25.4 percent from a year earlier before seasonal adjustment, marking an 11th straight month of year-on-year expansion.

"We maintain our view for the second month in row that machinery orders are on an upward trend," an EPA official said. "Orders from IT-related sectors remain fairly robust."

He voiced doubts, however, that IT-related demand will continue to be strong, citing an apparently declining global demand for semiconductors. He also said machinery orders from non-IT industries show no signs of picking up.

Machinery orders are widely regarded as a leading indicator of corporate capital investment. Core orders exclude those for ships and those from electric power companies, which are a source of volatility because of their magnitude.

Orders from the manufacturing sector leaped a seasonally adjusted 21.7 percent from a month before to 482.4 billion yen after a 15.6 percent drop in September.

Orders also rose 31.3 percent from a year earlier before seasonal adjustment.

Among the 17 manufacturing industries listed in the EPA's closely watched report, 13 registered month-to-month increases in machinery orders in October.

Orders from the nonmanufacturing sector came to 598.7 billion yen , off 0.4 percent on a seasonally adjusted basis from September but up 20.7 percent on an unadjusted basis from a year before.

Overall orders, including government and foreign orders, grew 6.6 percent to 2.216 trillion yen from a month earlier. The orders were up 10.4 percent from a year before, marking a 13th consecutive month of increase.

Government orders totaled 334.5 billion yen, down a seasonally adjusted 10.2 percent from September but up an unadjusted 16.1 percent from a year earlier.

Orders from foreign clients rose 14.3 percent from a month before to 587.7 billion yen, but they weakened 7.1 percent on an unadjusted basis from a year earlier for the first downturn in 13 months.

"Foreign orders are still at a high level. But the pace of their growth is slowing. We are wondering how they will move in the future," the EPA official said.

Growth predicted

Japan's economy is expected to keep growing in fiscal 2001, which begins April 1, extending its slow recovery into a third year, Nomura Research Institute Ltd. said in a report released Friday.

The research arm of Nomura Securities Co. said the nation's gross domestic product -- the broadest measure of economic health -- will likely grow an inflation-adjusted 2.2 percent in fiscal 2001, up from an estimated 1.7 percent for the current fiscal 2000.

The institute said the economy may come to a temporary standstill toward the end of this year as the growth in exports and government spending decelerates and demand for information technology becomes weaker.

But the economy looks set to pick up steam again after the new year begins as corporate capital investment expands into a wider range of sectors and consumer spending grows moderately.