The Japanese government unveiled a report that showed a 4.1% increase in machinery orders in October 2016 from a 3.3% decline in September.
Meanwhile, economists had expected a modest 1% rise. On a yearly basis, machinery orders fell by 5.6% after rising by 4.3% in 2015.
"If this pick up continues, capital expenditure might increase in fiscal 2017," said Takeshi Minami, chief economist at Norinchukin Research Institute, adding that improvement in domestic demand may help boost capital expenditure.
October's figures play into hands of Japanese policymakers, who count on capital spending to provide sustainable growth of the Japanese economy.
Capital expenditure declined in the July-September period for the first time since 2012. This means that uncertainty over the economic outlook undermines businesses’ confidence in the country’s economy.
