Japan's core machinery orders fell in November at the fastest pace in seven months in a sign that some companies may be turning cautious about capital expenditure because of uncertainty over domestic and overseas demand for goods and services.
Core orders, a highly volatile data series regarded as a leading indicator of capital expenditure, fell 5.1 percent in November from the previous month, Cabinet office data showed on Monday, more than the median estimate for a 1.7 percent decline.
Many economists originally forecast that capital expenditure would gradually increase this year, but growing concerns that U.S. President-elect Donald Trump may adopt protectionist trade policies could cause companies to scale back investment.
Core machinery orders fell in November due to a decline in orders from chemicals makers, oil refiners and the transport sector, the data showed.
Orders from the wholesale and retail industries also fell in November.
Orders from the services sector fell 9.4 percent in November after a 4.6 percent increase in the previous month.
Orders from manufacturers rose 9.8 percent, following a 1.4 percent decline in the previous month.
Trump, who takes office on Jan. 20, has rattled the Japanese auto industry by threatening to apply a large border tax on cars they manufacture in Mexico and ship to the United States.
Some economists worry that once Trump takes office, his criticism could shift to the goods Japan manufacturers within its own borders for export the United States, which could discourage Japanese capital expenditure.
There are also concerns that trade friction with the United States could hurt Japanese consumer sentiment, which would then weigh on household spending.