Japan’s core machinery orders - which exclude volatile items like ships and electric power - fell 0.6% month-over-month to 913.5 billion yen in May 2025. The decline was significantly smaller than April’s sharp 9.1% drop and better than market expectations for a 1.5% fall. The decrease was driven by the manufacturing sector, where orders slipped 1.8% to 448.5 billion yen. Notable declines were seen in chemical and chemical products (-38.7%), business-oriented machinery (-29.3%), and pulp, paper, and paper products (-18.5%). In contrast, non-manufacturing orders rose 1.8% to 479.3 billion yen, supported by strong gains in mining and quarrying of stone & gravel (91.5%), real estate (76.5%), and finance & insurance (16.7%). Year-over-year, private-sector machinery orders increased 4.4% in May, down from April’s 6.6% gain but still above forecasts of 3.4%. Core machinery orders are viewed as a key, though volatile, leading indicator of capital spending over the next six to nine months.