(Bloomberg) -- Japan’s August machinery orders slid the most in almost five years, adding to concern the world’s third-biggest economy may be heading for a recession.
Core machinery orders, a leading indicator of capital expenditure, fell 14.5% in August from a year ago, its biggest drop since November 2014, according to Cabinet Office data released Thursday. Economists had estimated an 8.4% drop. Orders slipped 2.4% from July.
Orders by manufacturers dropped 17.4% from a year ago and non-manufacturers declined 12.1% from a year ago. The drop in non-manufacturers poses a challenge to the Japanese economy since they have boosted capital investment and propped up growth as a global economic slowdown and trade conflicts weighed on manufacturers. Economists forecast a contraction in the final quarter of this year after a sales tax increase took effect on Oct. 1.
“The fall among non-manufacturers is a big deal,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Wages and incomes, including winter bonuses, are struggling to rise, which is weighing on non-manufacturers bit by bit."
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson, Jason Clenfield
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