Core machinery orders rose a seasonally adjusted 4.2 percent in December from the previous month after a steep fall in November, the government said Wednesday.
The private-sector orders totaled ¥806.6 billion. They are widely regarded as a leading indicator of future capital spending.
The figure excludes orders for ships and from utilities because of their volatility.
The rise followed a 14.4 percent slide in the previous month. The government left unchanged its basic assessment of core machinery orders, saying they are showing “signs of picking up.”
“Considering the sharp decline, the rebound was not very strong,” said Keisuke Okamoto, an economist at Daiwa Institute of Research. Okamoto said manufacturers are cautious amid a slowdown in China’s economy and weakness in U.S. energy-related firms due to cheap oil.
Core orders in the October to December period rose 4.3 percent to ¥2.48 trillion from the previous quarter, which saw a decline of 10 percent.
The Cabinet Office estimates core orders will rise 8.6 percent in the three months through March. But the figure does not reflect financial market turmoil that began from January this year, which could make firms more cautious about capital spending.
“The introduction of a negative interest rate by the Bank of Japan may have a positive impact on sentiment, but it is unlikely to boost business investment as firms lack a sense of security” over the economy, Okamoto said.
The figures are closely watched because Prime Minister Shinzo Abe’s government sees business investment as a pillar of economic growth. It accounts for around 15 percent of the nation’s gross domestic product.
In December, orders from the manufacturing sector fell 3.4 percent to ¥326.9 billion in December for the second straight monthly decline, led by falls in orders from such sectors as chemical firms and auto and auto-parts manufacturers.
Orders from the nonmanufacturing sector surged 8.5 percent to ¥475.3 billion following an 18 percent fall, reflecting growing system-related investment by the financial and insurance industry.
Total orders, including those from the public sector in Japan and overseas, climbed 3.6 percent to ¥2.22 trillion.
Overseas demand for Japanese machinery, an indicator of future exports, dropped 3.1 percent to ¥939.5 billion, for the second consecutive monthly decline.