Core private-sector machinery orders fell in December at the fastest pace on record, down a seasonally adjusted 15.7 percent on month, the government said Wednesday, casting a dark shadow on business investment, a pillar of the Abe administration’s economic growth strategy.
The orders, which exclude those for ships as well as those from utilities due to their volatility, shrank for the first time in three months to ¥744.1 billion, the Cabinet Office said, dropping much quicker than market expectations.
It was the sharpest month-on-month decline in orders, regarded as a leading indicator of capital spending, since officials began compiling comparable data in April 2005.
Prime Minister Shinzo Abe has made efforts to bolster business investment in order to end nearly two decades of deflation.
December’s results may raise concern that capital spending will deteriorate, which could pose a threat to the broader economy that is already expected to languish when the consumption tax rises to 8 percent in April.
A Cabinet Office official, however, said the 15.7 percent plunge came just after a 9.3 percent jump in November, indicating that companies have not grown wary of boosting their investment.
The government therefore left its basic assessment unchanged, saying the orders are “on a growth trend,” but it added they “significantly decreased in December.”
Orders from manufacturing sectors plummeted 17.3 percent to ¥292.6 billion, while those from nonmanufacturers fell 17.2 percent to ¥455.7 billion.
The machinery order data covered orders received by 280 selected makers.