TOKYO, Oct 9, 2008 (AFP) - Japan's core machinery orders, a key gauge of corporate capital spending, slumped 14.5 percent in August from the previous month, a much bigger drop than expected, the government said Thursday.

The core private sector machinery orders, which exclude particularly volatile demand from power companies and for ships, dropped for the third consecutive month, after a 3.9 percent fall in July.

The market's average forecast was for a fall of around 3.6 percent.