Japan's core private-sector machinery orders drop 3.3 pct. on month in Sept.

Japan's core private-sector machinery orders dropped 3.3 percent in September from a month earlier on a seasonally adjusted basis, the Cabinet Office said Thursday.

According to the Cabinet Office, machinery orders in the recording period totaled 843.7 billion yen (7.99 billion U.S. dollars) and the decline in September was bigger than median market forecasts for a 0.8 percent downturn and follows a 2.2 percent drop logged in August.

Looking ahead, companies surveyed by the Cabinet Office know expect their orders will retreat 5.9 percent in the October-December period from the previous quarter. This compares to a 7.3 percent rise in the previous July-September quarter.

Machinery orders are a key advance indicator for corporate capital spending and the government uses the data to predict the strength of business spending in a six to nine month period ahead and such business investment accounts for roughly 15 percent of Japan's gross domestic product.

As such, the figures will reinforce a grim picture of business spending here, as Japanese Prime Minister Shinzo Abe is relying on companies capital expenditure to drive private sector-led growth, in an economy severely lacking in key drivers.

The world's third-largest economy has seen businesses reluctant to spend, derailing the governments growth plans, as corporations are facing slumping domestic and overseas demand and the downside effects of a persistently strong yen.

Types of machinery included in the monthly government survey comprise engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships, water crafts, as well as sub types in the aforementioned categories. Endit