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Core machinery orders fell a seasonally adjusted 9.1 percent in May from the previous month, the sharpest fall in nearly two years, government data showed Thursday, adding to signs of a slower recovery in capital spending by firms.

The value of the private-sector orders fell for the first time in three months to ¥692.9 billion, the Cabinet Office said. The rate of decline was the sharpest since August 2008, when orders dropped 10.2 percent, and was much larger than the average forecast of a 2.5 percent fall among economists in a survey.

The core orders, a key indicator of future business spending, exclude orders for ships as well as those from electric utilities, which are normally seen as volatile.

The decline in May followed a 5.4 percent rise in March and 4.0 percent climb in April. The government still struck an optimistic note about the underlying trend in machinery orders, keeping to its basic assessment that orders “show signs of picking up.”

Slower growth in exports and the diminishing effects of fiscal stimulus, including subsidies for the purchase of energy-efficient appliances, have dented corporate appetites for fresh spending and production, the office said.

That trend is clear in manufacturing sectors, where orders fell 13.5 percent to ¥256.2 billion. The office sees the decline as a reaction to earlier gains.

While orders from general machinery makers and carmakers are recovering, those from electric machinery and communications equipment makers may have peaked, it said.

Orders from nonmanufacturers, meanwhile, dropped 6.0 percent to ¥436.0 billion. The transportation section led the fall while other service sectors, including finance and telecommunications, showed little significant change in their orders, the office said.

Overseas demand, which indicates the future course for exports, rose 2.7 percent to ¥760.8 billion. In April, demand fell 3.7 percent, fueling concerns of slower growth in exports, one of the main engines of the economic recovery.

The value of overall machinery orders received by 280 select machinery makers, including those placed by the public sector and from overseas, fell 10.8 percent in May from April to ¥1.74 trillion.

“We expect to maintain the trend of recovery” in machinery orders, said Keisuke Tsumura, a parliamentary secretary of the Cabinet Office.

“The pace of the recovery could be slower and weaker than earlier thought,” he added.

Masaaki Kanno, chief economist at JPMorgan Securities Japan Co., was cautious about jumping to any conclusions with a single-month result in the notoriously volatile machinery order data.

“The liquidity in manufacturers’ hands has peaked, helped by (profits from their) exports,” he said, adding that the main focus is how the companies will use the money. “There is a possibility that (makers) will spend abroad” to boost their output capacity.

The government forecasts 1.6 percent growth in core machinery orders in the April-June period from the previous quarter. The orders need to grow at least 5.5 percent in June to meet the estimate.

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