Core private-sector machinery orders fell a seasonally adjusted 1.6 percent in September from a month earlier for the third consecutive monthly decline.

But while the ongoing slide has rekindled fears that the Japanese economy may again have strayed from the track toward full-fledged recovery, a fairly strong recovery is expected in the October-December period, the Cabinet Office's Economic and Social Research Institute said Tuesday in a preliminary report.

The report says core orders for September totaled 870.3 billion yen, up an unadjusted 0.6 percent increase from a year earlier and rising for the ninth straight month.

Core orders in the July-September quarter contracted 2.9 percent from the previous quarter to 2.68 trillion yen, marking the first decline in three quarters.

Private-sector machinery orders are considered a leading indicator of corporate capital spending six to nine months ahead. The core orders exclude orders for ships and from electric power companies, which tend to vary widely due to their huge size.

Despite a drop in the leading indicator in both the reporting month and July-September quarter, the government said it is maintaining its basic assessment that machinery orders are on a gradual rising trend, citing the expected recovery in the October-December quarter.

"Although there is weakness in the immediate situation, the basic trend is one of gradual increase," a Cabinet Office official said.