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Data from the Japanese government shows that core machinery orders in Japan fell in April for the first time in three months,Niuhui following a significant surge in the previous month. However, the Cabinet Office stated that capital expenditure remains expected to recover.

This data release comes before the Bank of Japan (BOJ) decided last week to start scaling back its massive bond-buying program and will announce a detailed plan next month to reduce its balance sheet by nearly $5 trillion.

In April, core orders fell by 2.9% month-on-month, compared to economists surveyed by Reuters who expected a 3.1% decline. This is the first decline in three months. The data, which is highly volatile, is considered an indicator of capital expenditure in the next six to nine months.

In March, manufacturing orders rose by 19.4% month-on-month, while non-manufacturing orders fell by 11.3%.

The Cabinet Office maintained its assessment that machinery orders are showing signs of recovery.

"Overall, core orders are steadily recovering due to inbound tourism demand and rising wages," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"As the U.S. and European economies are still struggling with high interest rates and China is facing issues in the real estate market, we cannot place too much hope on overseas markets."

External orders (which are not included in core orders) rose by 21.6% month-on-month in April, after a 9.4% decline in the previous month.

Japanese companies tend to make large-scale spending plans to upgrade plants and equipment, but often slow down implementation due to uncertainties about the economic outlook.

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