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Economy

Japan's July machinery orders drop 6.6% after June surge

Government maintains assessment that orders show 'signs of picking up'

Tokyo remains unmoved as this leading indicator of capital expenditure takes a fall, saying firm demand remains.

TOKYO (Kyodo) -- Japan's core private-sector machinery orders dropped 6.6 percent in July from the previous month, pulled down by a plunge in those from nonmanufacturers that had surged in June on strong demand from the transport industry, government data showed Thursday.

The orders, which exclude ships and those placed by electric utilities due to their volatility, totaled 896.9 billion yen ($8.3 billion), according to the Cabinet Office.

The orders, seen as a leading indicator of capital expenditure, jumped 13.9 percent in June thanks to big-ticket orders for railway cars from the transport sector, marking the largest increase on record since comparable data became available in 2005.

Despite the 6.6 percent fall, the Cabinet Office maintained its assessment that the orders are showing "signs of picking up." A government official told reporters there was no major change from June and that a first gain in orders from manufacturers in three months indicated firm demand.

In the reporting month, orders from manufacturers climbed 5.4 percent to 384.1 billion yen, helped by nonferrous metals and shipbuilding sectors.

But demand from nonmanufacturers, minus ships and those from electric utilities, fell 15.6 percent to 518.9 billion yen as the transport and postal industries became the biggest downward contributors.

In June, the big-ticket orders helped push up overall machinery orders from nonmanufacturers by 30.5 percent from the previous month.

In July, orders from overseas, viewed as an indicator of future exports, declined 6.0 percent to 804.1 billion yen and total orders that also include the public sector inched up 0.1 percent to 2.36 trillion yen.

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