Core private sector machinery orders fell slightly in December, signaling a more cautious stance by companies toward spending amid risks to the global economy, government data showed Monday.
The orders, which exclude those for ships and from electric utilities because of their volatility, dropped 0.1 percent from the previous month to ¥862.6 billion. It was the second consecutive decline following a 0.02 percent drop in November.
The Cabinet Office downgraded its assessment of the orders, seen as a leading indicator of capital spending, from “stalling in their recovery” to simply “stalling.”
Robust capital spending has been one of the main drivers of the Japanese economy as firms have rushed to boost capacity and productivity. The economy grew an annualized real 1.4 percent in the final quarter of 2018, recovering from a series of natural disasters that hit Japan last summer.
But risks, including heightened trade tensions between the United States and China, appear to be sapping some of that appetite.
“Judging from the latest data, it’s hard to expect machinery orders to begin increasing again soon,” a government official said in a news briefing.
Orders from the manufacturing sector fell 8.5 percent to ¥361.8 billion amid shrinking demand from the oil and coal industries and machinery manufacturers.
From the nonmanufacturing sector, orders grew 6.8 percent to ¥496.6 billion on the back of increased orders from telecommunications and financial firms.
Total orders, including those from the domestic public sector and abroad, fell 18.6 percent to ¥2.32 trillion.
For all of 2018, core orders rose 3.6 percent to ¥10.51 trillion.