Core private-sector machinery orders dropped a seasonally adjusted 3.2 percent in March from February, the government said Thursday.
Orders are also expected to fall 3.2 percent in the April-June period from the previous quarter, amid slow orders from nonmanufacturers.
The March reading, worth 910.7 billion yen, was below the market forecast of a 5.9 percent increase. The Cabinet Office maintains, however, that core machinery orders are on a rising trend, in keeping with a steady improvement in the nation's economy.
The 3.2 percent month-on-month drop in March, following a 2.8 percent rise in February, represents an unadjusted 0.2 percent rise from a year earlier. For the whole of fiscal 2003, core private-sector orders rose 8.2 percent from the previous year to 11.11 trillion yen, marking the first expansion in three years.
The forecast of a 3.2 percent fall for the April-June period, which put orders at 2.68 trillion yen, was attributed to an expected drop in machinery orders from nonmanufacturers. Telecom carriers are cautious about new capital investment at a time when there is a shift from current cellular phone models to third-generation models, a government official said.
Despite the downbeat April-June projection, private-sector economists said they expect some firms to revise their capital investment plans upward later this year.
"If you look at the nation's broadening economic recovery and growth projections for this year and next year, you don't have to be pessimistic about capital investment only by seeing the latest data," said Mamoru Yamazaki, chief economist at Barclays Capital Japan Ltd.