Japan's core private-sector machinery orders dropped larger-than-expected 8.2 percent in September on month, as global uncertainty causes firms to rein in spending, official data showed Thursday.

The data, a leading indicator of corporate capital spending, highlighted Japan's struggle with a strong yen, officials and experts said, despite reconstruction demand following the March 11 earthquake and tsunami.

"Moves in machinery orders are one step forward, one step back," the Cabinet Office said in a statement, altering its wording from the previous month when it said orders were on a "recovery trend."

The core data, which exclude volatile demand from power companies and for ships, was worse than the market expectation of a 7.1 percent fall, following a 11.0 percent rise in August and a 8.2-percent fall in July.

The September decline confirms other recent data that suggest the Japanese economy has been hit by the yen's appreciation and uncertainty over the global economy.

"The strong yen is hurting exports, and the outlook for overseas economies remains uncertain. So overseas demand is weak," a Cabinet Office official told reporters.

In the three months to September, the orders gained 1.5 percent for the third straight quarterly rise, but the Cabinet Office expects a 3.8-percent slide in the ongoing quarter to December.

"The decline reflects worsening sentiment among companies about the global economy's outlook as European debt problems are worsening," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"I expect growth in orders will slow further toward December of this year."

But orders might get a lift next year, when the government's third extra budget, mainly aimed at reconstruction of the tsunami-hit northeast, may stimulate private demand, he added.

-- Dow Jones Newswires contributed to this report --