By Tetsushi Kajimoto
TOKYO (Reuters) -Japan's core machinery orders fell in January month-on-month for the first time in four months as new curbs to stem the spread of the coronavirus clouded the outlook for business spending.
Policymakers in the world's third-largest economy are counting on capital expenditure to sustain a private sector-led recovery from last year's pandemic-induced slump.
Although machinery orders are seen picking up as a trend, a prolonged state of emergency issued in Tokyo areas could put downward pressure on capital spending, analysts say.
Cabinet Office data out on Monday showed core machinery orders, a highly volatile data series seen as a leading indicator of capital spending in the coming six to nine months, fell 4.5% in January from the previous month.
The reading compared with a 5.5% decline expected by economists in a Reuters poll, falling for the first time in four months.
The economy is expected to have suffered another contraction in the current quarter as COVID restrictions hampered service-sector activity, such as hotels and restaurants, keeping companies from boosting investment.
By sector, orders from manufacturers fell 4.2% month-on-month in January, while service-sector orders tumbled 8.9%, down for the first time in four months.
External orders, which are not counted as core orders, rose 6.4%, up for a fourth straight month.
Compared with a year earlier, core orders, which exclude those for ships and electric utilities, grew 1.5% in January, versus a 0.2% decline forecast by economists, the data showed.
The Cabinet Office stuck to its assessment on machinery orders, describing them as picking up, having upgraded it for the third straight month.
(Reporting by Tetsushi Kajimoto; Editing by Sam Holmes)