TOKYO (AP) -- Japanese machinery orders, a barometer of corporate spending, fell a less-than-expected 1.7 percent in December from November, with a recovery among manufacturers, figures showed Monday, but economists warned the outlook remains gloomy.
Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell for a third straight month to 741.6 billion yen ($8.06 billion), the Cabinet Office said.
That was better than the 8.7 percent decline projected in a Kyodo News survey of economists, and far smaller than the 16.2 percent plunge in November -- the steepest monthly drop on record.
The report offered some hopeful signs. Machinery orders from manufacturers rose 7 percent, including improvement in steel makers. Total private sector machinery orders, including those from utilities and shipbuilders, rose 7.6 percent.
While orders from non-manufacturers such as construction and power generation fell 8.3 percent, orders from overseas jumped 27.6 percent in December, a turnaround from a 14.4 percent decline in November.
The Cabinet Office projected a 3.5 percent increase in the orders for the January-March quarter compared to the previous quarter.
"The results do not change the faltering state of the economy," said Hiromichi Shirakawa, chief economist at Credit Suisse Japan, citing declining orders in key sectors -- autos, electronics and ordinary machines.
"With work forces cut, profitability thinning and overseas demands falling, there is little room for manufacturers to spend on machinery investment," he said.
Separate data also pointed to slumping demand for Japan's export-oriented economy.
The Finance Ministry said Monday that Japan's current account surplus -- the broadest measure of Japan's trade with the rest of the world -- fell 92.1 percent in December from a year earlier to 125.4 billion yen ($1.36 billion). The drop, the 10th consecutive month of year-on-year declines, was the largest since 1985.
Exports declined 35.1 percent to 4.59 trillion yen ($499.0 billion), while imports fell 21.2 percent to 4.79 trillion yen ($520.63 billion).
Export of automobiles and auto parts were among the most severely affected, along with semiconductors, dropping by 45.4 percent, 38.5 percent and 42.9 percent respectively.
Japan's exports to the United States fell 36.9 percent, while those to the European Union dropped 41.8 percent in December. Asia-bound shipments were down 36.5 percent.
Japanese exporters are reeling from waning foreign demand for the country's cars and gadgets, as well as a stronger yen. Top Japanese brands such as Sony Corp. and Toyota Motor Corp. are among the many that have been badly hit. Both companies have cut production, jobs and projections for the fiscal year through March.