TOKYO (Kyodo) -- Japan's core private-sector machinery orders fell a seasonally adjusted 3.2 percent in January from the previous month to 837.9 billion yen ($7.3 billion) on weakness among manufacturers, the government said Monday.
The orders, which exclude those for ships and from utilities because of their volatility, are widely viewed as an indicator of future capital spending by companies. They fell following a downwardly revised 2.1 percent rise in December, while market participants had forecast a slight decline.
The Cabinet Office maintained in its basic assessment that machinery orders had been picking up but have tapered off.
Orders from the manufacturing sector fell 10.8 percent to 330.9 billion yen, the first loss in four months, dragged down by the nonferrous metal sector that had registered strong growth in the previous two months.
Orders from the nonmanufacturing sector rose 0.7 percent to 507.6 billion yen for the second consecutive month of increase, thanks to strength in the finance and insurance sector.
"The overall trend (of recovery in machinery orders) has not changed," an official with the Cabinet Office said. "We expect the recent modest recovery will continue," the official said.
In the January-March period, core orders are projected to gain 1.5 percent, led by an expected recovery in the manufacturing sector, the latest data showed.
Prime Minister Shinzo Abe and the Bank of Japan have been seeking to encourage companies to increase capital spending as the world's third-largest economy struggles to beat chronic deflation.
Recent economic data have shown Japanese companies have been gradually stepping up their investment but the longer-term outlook for capital expenditure appears uncertain, given that the economy relies heavily on exports for its own growth.
U.S. President Donald Trump is widely expected to move to reduce the country's trade deficits with Japan while underscoring the need to prevent any devaluation in the yen. Washington has suggested it aims to start bilateral free trade talks at an early date.
In Monday's data, overseas demand for Japanese machinery, an indicator of future exports, increased 3.2 percent to 880.6 billion yen in January.