With demand for machine tools still weak in China and a drop-off in Japan, capital investment is losing momentum worldwide, according to a Nikkei Asian Review report. Machine tool orders related to smartphone production have languished, with few prospects of rebounding. Even the automotive and aircraft industries appear to be curtailing spending after investing aggressively in equipment.

The Japan Machine Tool Builders' Association reported Tuesday a 19.6 percent year-on-year decrease in orders to 104.4 billion yen ($1.02 billion) in July, a 12th straight month of declines for this gauge of capital investment outlook. Domestic orders shrank 14.3 percent to 51.3 billion yen, while exports tumbled 24.2 percent to 53.1 billion yen -- falling below 55 billion yen for the first time in 39 months.

"Demand from automotive companies in the U.S. plummeted in July, losing strength," a staffer at Makino Milling Machine said. Orders from the U.S. account for roughly 30 percent of Makino Milling's sales, and the company's exports declined 30 percent on the year in July. The official expressed concern about the outlook toward the end of the year.

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Japanese machine tool makers see declining demand domestically and abroad.