By Kantaro Komiya
TOKYO (Reuters) -Japan's core machinery orders fell more than expected in July, as manufacturers balk at new investments in the face of sluggish global growth and weakness in major market China, pointing to a difficult period ahead for the world's third-largest economy.
The Cabinet Office data released on Thursday comes on top of several other indicators over recent weeks that have raised the challenge for Japanese policymakers confronting soft demand overseas and at home.
Core orders, the leading indicator of Japanese business spending, were down 1.1% in July from the previous month, the data showed. The decline was bigger than a 0.9% drop expected by economists in a Reuters poll and followed a 2.7% gain in June.
«Export-reliant manufacturers are hesitant at ramping up investments in the wake of anaemic Chinese economy and Western central banks' relentless tightening,» said Chisato Oshiba, economist at Dai-ichi Life Research Institute.
«Manufacturers are eager to invest in their production facilities, but uncertainties overseas discourage their decisions… at least through September.»
Orders from manufacturers fell 5.3% in July, the largest decline in eight months, due to weak demand for computers from industries including electric machinery, auto and chemicals. Orders from «core» service-sector firms excluding shipping and electric utilities grew 1.3%.
On a year-on-year basis, core orders, a highly volatile data series regarded as a gauge of capital spending in the coming six to nine months, contracted 13.0%, larger than a forecast for a 10.7% fall, the data showed.
The government maintained its weak view on machinery orders, saying they are «stalling», highlighting the bumpy road ahead for Japanese
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