Japanese manufacturers forecast a sixth straight quarterly fall in machinery orders in July-September, suggesting they remain wary of expanding their production capacity.

June data showed the biggest rise in more than a year, but the outlook for the current quarter suggests capital spending won’t contribute much to overall economic growth. Analysts said the Bank of Japan’s view the economy will improve from the latter half of this fiscal year may now look a little too rosy.

They expect the BOJ to maintain a cautious view on the economy and hold interest rates near zero at least until early 2011.

Manufacturers surveyed by the government forecast core machinery orders, a highly volatile series seen as an indicator of capital spending in the coming six to nine months, would fall 8.6 per cent in July-September from the previous quarter.