Japan machinery orders fall faster than expected

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    TOKYO- Japan’s core machinery orders fell for the first time in three months in September and at faster than expected pace, denting hopes that a quick pickup in business spending could help the economy stage a brisk recovery from its COVID-19 crisis.

    The decrease in core orders underscored corporate Japan’s reluctance to commit to more capital investment as a resurgence in coronavirus infections darkened the outlook for global demand.

    Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, lost 4.4 percent in September after a 0.2 percent rise in the previous month.

    The drop, which marked the first decline since June, was much larger than a 0.7 percent contraction seen by economists in a Reuters poll.

    “Production and exports are recovering at a fast pace, so corporate earnings are also likely to improve quite quickly,” said Hideo Kumano, executive chief economist at Dai-ichi Life Research Institute.

    “But with output dropping so much in the second quarter, firms remain cautious about capital spending.”

    Manufacturers expected core orders to fall 1.9 percent in October-December, after a 0.1 percent drop in the previous quarter that marked the fifth straight quarter of declines, the Cabinet Office data showed on Thursday.