• Kyodo

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Japan’s core private-sector machinery orders fell 2.4% in August from the previous month, as a decline in demand from manufacturers outweighed an increase from nonmanufacturers, official data showed Wednesday, leading the government to downgrade its assessment for the economic indicator.

The orders, which exclude those for ships and from utilities because of their volatility, totaled ¥839.3 billion ($7.4 billion) following a 0.9% rise in July, according to the Cabinet Office.

The agency downgraded its assessment for the first time since February, saying machinery orders, seen as a leading indicator of corporate capital spending, were showing “signs of stalling in their recovery” in August. Until July, the office had said they had been showing “signs of picking up.”

“Although we downgraded the view, the latest (Bank of Japan) tankan business survey showed that capital spending plans of big companies have remained solid, so we expect the monthly decrease in machinery orders to be temporary,” a government official told reporters.

Machinery orders from the manufacturing sector fell 13.4% to ¥373.2 billion, the first decrease in five months and the sharpest fall since a 26.6% decline seen in February 2016.

Sectors such as electrical machinery producers and general-purpose machinery firms saw sharp drops following gains the previous month.

Orders from the nonmanufacturing sector grew 7.1% to ¥456.2 billion, following a 9.5% slide in July, underpinned by solid demand for information technology systems including next-generation 5G networks from wholesalers and retailers as well as telecommunication service providers, the official said.

Total orders stood at ¥2.7 trillion, down 7.8%, after growing 11.7% in July. Among them, orders from overseas, seen as an indicator of future exports, decreased 14.7% to ¥1.3 trillion, following a 24.1% jump the previous month.

Those from the public sector edged down 1.3% to ¥289.7 billion. They rose 14.0% in July.

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