Core private-sector core machinery orders fell 10.0 percent in September from the previous month, a bigger drop than market forecasts of a 7.0 percent decline, government data showed on Thursday.
Economists said the month-on-month decline in core orders - a volatile series regarded as an indicator of capital spending in the coming six to nine months - was largely in reaction to an 8.2 percent jump in August.
"The September figure was weaker than expected, but the absolute level of the orders is quite high," said Takeshi Minami, chief economist at Norinchukin Research Institute.
In particular, a 26.1 percent fall in telecommunications was a reaction to a hefty 17.9 percent gain in August, and contributed largely to the weak orders figure for September, a Cabinet Office official said.
The ministry left its assessment unchanged, saying machinery orders were continuing to rise.
Economists also said the overall trend for the core orders remains firm, encouraged by the government forecast of a 6.2 percent increase for the orders in the fourth quarter.
"The pickup is broadening to small and medium-sized enterprises," Minami said. "Banks are increasingly willing to lend to these companies and the positive macroeconomic background also supports the outlook for a sustained rise in investment."
Data showed both manufacturing and non-manufacturing sectors were set to post gains in the three months to December.
In the July-September quarter, core orders rose 2.1 percent, the fourth straight quarterly increase, beating the government's forecast of a 0.9 percent rise.
"The fall in machinery orders is slightly bigger than expected, but overall we're still seeing a firm trend with the firm quarterly rise and the upbeat outlook for October-December," said Yoshimasa Maruyama, an economist at BNP Paribas.
Gross domestic product data to be released on Friday is expected to show the economy in a steady recovery, although growing at a somewhat slower pace compared to previous quarters.
A Reuters survey of 27 economists last week produced a median forecast of 0.3 percent expansion in real, price-adjusted terms in July-September from the preceding quarter, or 1.2 percent growth on an annualised basis.
Capital spending is expected to have increased 0.1 percent in July-September, underpinning growth.