Japanese core machinery orders, the key leading indicator of business investment in equipment, posted their first drop in two months in July, down 0.1 percent after rising 2.1 percent in June and falling 3.2 percent in May. It was largely in line with the median economist forecast of a 0.2 percent drop.

The Cabinet Office maintained its assessment, saying,"The pickup in machinery orders is pausing."

Machinery orders are expected to edge 0.2 percent lower in July for year-over-year growth of 2.5 percent. The government maintained its downbeat assessment in the June report saying"the pickup in machinery orders is pausing".

Machine Orders are the total value of new private-sector purchase orders placed with manufacturers for machines excluding volatile items such as ships and utilities. It is a leading indicator of production. Analysts consider the data an indicator of capital spending. Rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.

It is a leading indicator of production. Rising purchase orders signal that manufacturers will increase activity as they work to fill the orders. The importance of machinery orders cannot be overstated given the economy's dependence on exports. The purpose of these data is to get a picture of machinery manufacturers' order books and to collect basic material for analyzing the direction of the economy through an early understanding of trends in capital investment in machinery.