Japan's closely watched machinery orders fell for the first time in five years in 2007, official data showed on Friday, sparking fears that a US slowdown may pull Asia's largest economy down.
The data raised renewed concern about Japan's economic recovery, which has been based on exports, and contributed to a 1.44 percent fall on the Tokyo Stock Exchange despite a positive lead from Wall Street.
The private sector's core machinery orders, which exclude particularly volatile demand from power companies and for ships, fell 4.0 percent in 2007 from the previous year, with orders in December alone tumbling 3.2 percent. The machinery orders are closely watched by policymakers and markets as a leading indicator of corporate capital spending.
The December fall was significantly steeper than a drop of 0.8 percent expected by the market and marked the second straight month of decline after a 2.8 percent drop in November.
Despite the sustained downturn for the last two months of 2007, the Cabinet Office stuck to its assessment of a flat trend in machinery orders - the eighth straight month that it has made the same view. Economy and fiscal policy minister Hiroko Ota said there was "no need to be so pessimistic," noting orders were likely to rise in the January-March quarter.
The Cabinet Office said machinery orders are forecast to rise 3.5 percent for the January-March term from the previous quarter, following an overall 0.9 percent rise in the October-December period.