Japan's core private-sector machinery orders fell in May by a larger-than-expected 6.7 percent from the previous month to 952.5 billion, yen the government said Friday.
The government also cut its machinery orders assessment for the first time since October, while the May fall marks the largest since the 7.1 percent decline in December.
Core machinery orders registered a month-on-month fall for the second straight month, following seasonal adjustments, the Cabinet Office said. On a year-on-year basis, orders dropped an unadjusted 2.7 percent, marking a first fall in five months.
The Cabinet Office said the trend was "flat for machinery orders," revising down its prior assessment that there were "signs of improvement."
The 6.7 percent month-on-month drop was much larger than the 2.4 percent drop expected by economists polled by Kyodo News. A Cabinet Office official described the fall as "unexpected."
If core machinery orders remain flat in June from the previous month, they will record a 2.8 percent quarter-on-quarter drop in the April-June period, compared with the government's May projection of a 3.1 percent drop, the official said. The official added that they would need to gain 8.7 percent in June to avoid a quarter-on-quarter fall.
Core machinery orders grew 5.7 percent in the October-December period and expanded 0.8 percent in the January-March period.
Private-sector machinery orders are considered a leading indicator of corporate capital spending six to nine months ahead. Core orders exclude those for ships and those from electric power companies, which tend to vary widely due to their magnitude.
In May, orders from manufacturers plunged 20.6 percent from the previous month to 405.1 billion yen.