Posing a challenge for the Bank of Japan, the nation's index of coincident economic indicators fell 1.3% to 116.0 in March from 117.3 in February, striking the metric's lowest level since November, the Cabinet Office reported Friday.

The March index indicated an economy that was "halting to fall," said the the government agency.

The Japan coincident index measures factors including factory output, employment, exports and retail sales to gauge economic activity.

In addition, Japan's leading economic indicators index declined 0.5% to 107.7 in March from 108.2 in February, said the Cabinet Office.

The leading indicator measures the economic outlook for Japan based on factors such as job offers and consumer sentiment.

The possibly slowing Japan economy may pose a dilemma for the Bank of Japan.

At its policy meeting ended May 1, the Bank of Japan said the nation's "economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline on domestic corporate profits and other factors."

Japan's central bank lowered its estimate for growth of the the nation's gross domestic product (GDP) to 0.5% for the fiscal year started April 1, from the previous 1.1% outlook.

At the May 1 meeting, the Bank of Japan also voted to hold its key policy interest rate at 0.5%, holding rates fixed for the second-straight policy session.

Yet Japan's inflation rate on the consumer price index-core (CPI-core) that strips out fresh foods, logged at 3.2% on year in March, striking above the annual 2% target of the Bank of Japan.

Next week, Japan officials will report on the nation's first quarter GDP, and the possibly negative results may raise further dilemmas for the Bank of Japan, said ING Think, an arm of the Dutch investment house on Friday.

"Japan's economy is expected to contract in the first quarter by 0.1% quarter on quarter, seasonally adjusted, following a 0.6% gain in the last three months of 2024," said ING Think.