TOKYO, June 12 (UPI) -- Japan's core private-sector machinery orders, a leading indicator of corporate capital spending, fell 8.8 percent from March, the government said Wednesday.
"The total value of machinery orders received by 280 manufacturers operating in Japan decreased by 14.2 percent in April from the previous month on a seasonally adjusted basis," the Cabinet Office said on its website. "Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, decreased a seasonally adjusted by 8.8 percent in April."
The April change, the first such decline in three months, occurred despite various stimulus measures by the government of Prime Minister Shinzo Abe designed to pull the economy out of years of deflation.
In March, the orders had jumped 14.2 percent month-on-month, raising hopes of healthy capital spending by companies, needed to spur economic growth.
The March growth was the highest month-to-month increase since April 2005. In February, the orders were up 4.2 percent.
The Cabinet Office said April core orders totaled 723.3 billion yen ($7.5 billion), down from793.1 billion yen ($7.75 billion).
The announcement comes amid other encouraging economic developments including upgraded economic assessment by the Bank of Japan and the government's upward revision of first-quarter economic growth to 1 percent for an annualized 4.1 percent rate as the government's recovery policy takes hold. The policies have already checked the rising yen, thereby boosting exports which should encourage capital spending.
Japan is the world's third-largest economy after that of the United States and China.
Some analysts told Kyodo News the April decline suggested business investment, which has stagnated over the past year, is unlikely to make a strong rebound because of lingering skepticism about government policies.
"Capital spending is now on a recovery track, but it is not powerful" as the economy has yet to show clear signs of getting on a sustainable growth path, Kaori Yamato, an economist at Mizuho Research Institute, told Kyodo. "Firms might become more reluctant to increase their investment if market confusion is prolonged."
Other economists, however, said capital spending is expected to pick up with administration's efforts to bring total business investment to about 70 trillion yen in the next three years. Such steps would be in addition to aggressive monetary easing by the Bank of Japan and major public works projects.