Japan's core machinery orders, a leading indicator of capital spending, rose for the first time in three months but came in well below expectations.
Core machinery orders for June rose 8.8 percent on month after a record 19.5 percent plunge in May, government data showed on Thursday, much less than the 15.3 percent gain forecast by Reuters.
On a year-on-year basis, core orders declined 3 percent, versus expectations for a 3.3 percent rise.
More worrying, the Cabinet Office said in a statement that machinery orders are seesawing, which is a downgrade from its assessment last month that orders were in a rising trend but showing some weakness.
The figures came a day after Japan released gross domestic product data which showed growth slumping an annualized 6.8 percent in the second quarter, as a hike in consumption tax scuppered economic growth.
"As you can see from the machinery orders data, that there was clearly some pass through from the demand hit to corporate spending," Steven Wieting, global chief strategist at Citi Private Bank.
"Unfortunately, the tax increase was also a perfect antidote to the Bank of Japan's easing. It raises national savings, it doesn't harm exports but it holds down domestic consumption and as a consequence, altered the path for the yen weakness which is what they had been looking for with quantitative easing," he added.