The government on Thursday slightly upgraded its assessment of core private-sector machinery orders after these orders rose a seasonally adjusted 2.9 percent in June from May and grew 7.1 percent in the April-June period from the previous quarter.
The Cabinet Office said, however, that it will monitor future developments carefully, as it expects orders to drop 3.9 percent in the July-September quarter due to a slowdown in exports.
"There are signs that the machinery orders are hitting bottom," Yoshihiko Senoo, a senior economist at the Cabinet Office's Economic and Social Research Institute, said in upgrading the government's assessment for the second straight month.
June orders, which totaled 871.8 billion yen, were down an unadjusted 7.6 percent from a year earlier.
Private-sector machinery orders are considered a leading indicator of corporate capital spending six to nine months ahead.
The core private-sector orders exclude orders for ships and orders from electric power companies, which tend to be volatile due to their magnitude.