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Economy

Japan March core machinery orders fall 3.9% month on month

A rise of 7.1% forecast for April-June suggests capex could hold up

TOKYO (Reuters) -- Japan's core machinery orders fell in March for the first time in three months, but manufacturers forecast a rise for April-June, suggesting capital expenditure could hold up despite news that the economy contracted in the first quarter.

The 3.9 percent fall in core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, compared with a 3.0 percent drop seen by economists in a Reuters poll, Cabinet Office data showed on Thursday.

Manufacturers surveyed by the Cabinet Office forecast that core orders will rise 7.1 percent in April-June, after rising 3.3 percent in the previous three months and up for a third straight quarter.

"The upshot is that non-residential investment should remain a key growth driver this year," said Marcel Thieliant, senior Japan economist at Capital Economics.

By sector, orders from manufacturers declined 17.5 percent in March, down for the first time in three months, the data showed.

Service-sector orders increased 2.2 percent, up for a third straight month.

Overseas sales of machinery, which are not counted as core orders, fell 7.2 percent in March, down for two months in a row.

Compared with a year earlier, core orders, which exclude those for ships and from electric power utilities, declined 2.4 percent in March, the data showed.

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