TOKYO (AP) -- Japanese machinery orders, a closely watched indicator of corporate capital spending, lost steam in October as companies reigned in spending amid mounting economic recovery doubts.
Core machinery orders tumbled 4.5 percent in October from a month earlier, the government said Thursday. The figure excludes orders from shipbuilders and electric power companies, which tend to fluctuate more.
The result was worse than Kyodo News agency's forecast for a 4.3 percent decline.
Orders received by 280 core manufacturers that the Cabinet Office polls totaled 704.5 billion yen ($8 billion) for the month, versus 738 billion yen in September.
October's fall follows a robust 10.5 percent jump in September, which seemed to point toward growing corporate confidence.
Since then, however, deflation has intensified and the yen has strengthened against the dollar. Compounding worries are questions about the future of export demand as the effect of global stimulus measures wanes.
The government shocked investors and economists Wednesday with a sharp downward revision of third quarter gross domestic product. It now says the world's second biggest economy grew at an annual pace of just 1.3 percent, compared with 4.8 percent in its preliminary estimate.
The correction stems largely from a misreading of capital investment -- spending by companies on equipment, factories and other assets -- which fell 2.8 percent from the previous quarter after the government incorporated additional data. The Cabinet Office had initially estimated that companies increased spending by 1.6 percent.
Goldman Sachs economist Chiwoong Lee said he expects capital expenditures to stage a mild rebound in November.
"That said, we think a bona fide recovery in capex is unlikely without a sharp recovery in export industries in particular," Lee said in a note to clients.
Overall machinery orders in October rose 3.2 percent, helped by healthy overseas demand, which climbed 15.3 percent.
The Cabinet Office predicts that in the current October-December quarter, orders will increase 1.0 percent from the previous quarter.