The negative core data, which exclude volatile demand from power companies and for ships, followed a revised 1.0 percent gain in March and missed forecasts for a 1.2 percent increase, according to a Dow Jones Newswires poll.

Orders rose in March, driving expectations that gains would continue as companies sought to replace goods destroyed in the March 11 earthquake and tsunami.

Analysts said the latest data was an indication of the impact on production of the March disaster which left more than 23,000 dead or missing, shattered supply chains and led to power shortages causing major disruption to Japan's biggest companies.

"Unexpectedly weak machinery orders suggest slow production and weak Japanese exports going forward," said Daisuke Karakama, market economist at Mizuho Corporate Bank.

"The data may raise concerns that Japan capital spending in May and June may not be as strong as expected," he said.

Fears of an electricity supply-demand imbalance going into the summer months have eased slightly, but the situation remains volatile, analysts say.

The government has called on companies and households to reduce electricity consumption by 15 percent in the Tokyo and eastern Japan region.

However, others said the decline was due to gains in recent months and did not represent a downward trend.

"You don't have to worry about a single-month dip," said Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute.

Japan's economy contracted by an annualised 3.5 percent in the first quarter, the second consecutive quarter of shrinkage, which economists define as a technical recession.

In the aftermath of the 9.0 magnitude earthquake, industrial output saw its biggest ever fall and spending plunged as consumer and business confidence took a heavy hit.

Many of Japan's biggest companies saw profits tumble in the quarter and delayed forecasts due to the scale of the disaster's impact on production and sales.

Copyright AFP (Agence France-Presse), 2011