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Core private-sector machinery orders fell a seasonally adjusted 1.8 percent in April from the previous month to 874.9 billion yen, the government said Tuesday, indicating capital spending may slow later in the year.

The drop followed a 3.8 percent increase in March, and represents an unadjusted 4.3 percent rise from a year earlier for the fourth straight year-on-year increase, the Cabinet Office’s Economic and Social Research Institute said.

Private-sector machinery orders are considered a leading indicator of corporate capital spending six to nine months ahead. The core orders exclude orders for ships and from electric power companies, which tend to be volatile due to their huge size.

Despite the monthly fall, the government maintained its view there are “signs of improvement” in machinery orders. It was the fourth straight month for the government to retain that assessment.

Yoshihiko Senoo, director of the institute’s Business Statistics Department, said the assessment remained unchanged because the decline was small and represented a year-on-year increase for the fourth straight month on an unadjusted basis.

On the future outlook, Senoo said there is a need to monitor developments as corporate sentiment could be affected by the impact of severe acute respiratory syndrome, and gloomier views have been expressed in government polls of businesses.

To produce the projected 10.5 percent drop in the April-June quarter, core machinery orders must plunge 9.2 percent in May and June, Senoo said, and if the orders stay flat for the two months, the quarter would see a much smaller 1.7 percent fall.

In April, orders from manufacturers rose 1.2 percent from March to 336.4 billion yen, up from a 0.6 percent slide in March. Core orders from nonmanufacturers gained 0.5 percent to 544.8 billion yen, rising for the second consecutive month.

The core machinery order dropped despite the positive readings in both categories because the three figures were seasonally adjusted separately.

Of the 17 surveyed manufacturing industries, machinery orders from nine sectors fell, including precision instruments, petroleum and coal products and paper-pulp makers.

Of the 11 nonmanufacturers, orders from eight sectors fell, including power, real estate and information services.

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