TOKYO - Japan saw another decline in machinery orders in October in a fresh sign business spending, one of the few points of strength in the world's third-largest economy, is stalling as slumping exports bruise investment appetite.
"Companies are becoming increasingly cautious in regard to investment," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.The core machinery orders data is a highly volatile series but regarded as a key indicator of capital spending in the coming six to nine months. However, the drop in orders suggests Japanese manufacturers are increasingly cautious about their spending amid weakening demand, due in large part to slowing growth in China and the damaging Sino-U.S. trade war.
GROWTH DRIVER Some analysts say the third quarter strength masked fragility that could lead to future weakness, as a sales tax hike in October - the first in more than five years - slows consumption, one of the economy's main growth drivers. The export slump is also expected to slash Japan's tax receipts for the current fiscal year to more than 2 trillion yen below the government's initial target, a major blow to efforts to tighten public finances.
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