TOKYO (AP) -- A key barometer of corporate capital spending in Japan fell sharply in October, the government said Wednesday, in another grim sign that business investment is tumbling amid a deepening global slowdown.
Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell 4.4 in October from the previous month to 899.7 billion yen ($9.77 billion), the Cabinet Office said.
The drop follows a brief upturn in September, when core machinery orders rose 5.5 percent after three straight months of declines.
Economists surveyed by Kyodo News agency had predicted a 4.6 percent month-on-month drop.
Core machinery orders in the manufacturing sector fell 2.2 percent, while those among non-manufacturers fell 2.3 percent, the office said.
Total machinery orders, including those from electric power firms and ships, plunged 14.4 percent in October.
The figures, considered an important gauge of business investment in the future, underscore the severity of the downturn hitting the world's second-largest economy, which fell into recession in the third quarter.
Government data released Tuesday showed that the downturn in the July-September was worse than first thought as exports weakened, domestic demand fell and companies pared inventories.
Japan's economy actually shrank at an annual pace of 1.8 percent in the July-September period, compared with the Cabinet Office's original estimate of a 0.4 percent contraction. The figure was much worse than market expectations for a 0.9 percent decline in gross domestic product.
The global pullback has taken a particularly heavy toll on Japan's export-driven economy, which depends heavily on overseas demand for its cars and gadgets to fuel growth.
Among those hardest hit is electronics giant Sony Corp., which announced Tuesday that it plans to slash 8,000 workers, or 4 percent of its global payroll, in Japan's biggest job cuts since the U.S. credit crunch hit over the summer.
The company will close several plants, including one in Dax, France, cut investment in electronics and outsource some work. It will also lay off at least 8,000 temporary workers.
The moves will deliver more than 100 billion yen ($1.1 billion) in savings a year by March 2010, the company said.
"Now we are all facing a recession together," said Senior Vice President Naofumi Hara Tuesday. "It is impossible to predict how much longer the situation will last."
Economists predict that the central bank's quarterly "tankan" survey, which comes out Monday and polls 10,000 businesses, will show business sentiment has plunged to its lowest level in more than three decades.
AP Writer Mari Yamaguchi and AP Business Writer Yuri Kageyama in Tokyo contributed to this report.
