Japan's core private-sector machinery orders logged a worse-than-expected fall of 11.3 percent in July from the previous month, government data showed Thursday.
The data stirred doubts over the sustainability of the nation's economic recovery.
The seasonally adjusted figure, totaling 918.5 billion yen, was below the average market projection of a 2.1 percent drop, the Cabinet Office said.
It also marked the steepest decline since the 12 percent fall in September 2001.
The office said the drop represented a reaction to a 10.3 percent rise for the April-June quarter, maintaining the view that a trend of growth in machinery orders -- considered a leading indicator of corporate capital spending six to nine months ahead -- is taking hold.
The latest figure also represents unadjusted growth of 0.3 percent from a year earlier.
Private-sector economists said financial markets see the weak data as an indication that capital investment might log a significant slowdown toward year's end or early next year.
Takahide Kiuchi, senior economist at Nomura Securities Co., said the data raised the possibility that core machinery orders will shrink in the July-September quarter from the preceding quarter.
Core machinery orders must post gains of 12.2 percent in both August and September to achieve the government's forecast of a 1.8 percent rise in the July-September quarter from the preceding quarter, a Cabinet Office official said.
Many analysts are skeptical about this scenario.
The Cabinet Office said orders from manufacturers dropped 10.8 percent in July from the previous month to 387.1 billion yen, posting a third straight monthly decline.
Orders for transport machinery, such as those for aircraft and railway cars, and those for semiconductor machinery posted sharp falls.
Orders from core nonmanufacturers were down 12.3 percent to 529.7 billion yen, having posted a 10.1 percent rise in June.
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