Core private-sector machinery orders fell 3.9 percent in March from the previous month amid a lull in demand from manufacturers, government data showed Thursday.
The orders, excluding those for ships and from utilities because of their volatility, dropped for the first time in three months to ¥856.6 billion ($7.8 billion), the Cabinet Office said.
The decline in machinery orders, seen as a bellwether of capital expenditures, followed a rise of 2.1 percent in February and a drop of 8.2 percent in January.
Machinery orders from manufacturers fell 17.5 percent to ¥365.0 billion, the sharpest decline in more than two years, as demand for metalworking equipment, trains and ship engines dipped notably.
Orders from the nonmanufacturing sector, minus ships and utilities, rose 2.2 percent to ¥475.9 billion amid solid demand from the construction industry ahead of the 2020 Tokyo Olympics.
The Cabinet Office maintained its assessment that overall, machinery orders “show signs of picking up.”
Spending by companies has been a major driver behind Japan’s recent bout of economic growth, with firms expanding capacity to meet robust overseas demand and stepping up automation to cope with a labor crunch.
But the economy appears to be going through a temporary correction, shrinking by an annualized real 0.6 percent in the January-March quarter, according to government data released a day earlier.
Total machinery orders, including those from the domestic public sector and abroad, fell 7.9 percent to ¥2.23 trillion in the reporting month.
For the fiscal year through March, core orders edged down 0.8 percent to ¥1.01 trillion for the first loss in five years as sluggishness among nonmanufacturers more than offset a growth in orders from manufacturers.
On a quarterly basis, the core orders rose 3.3 percent in the January-March quarter, with the Cabinet Office projecting a 7.1 percent rise in April-June.
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