On an annual basis, orders climbed 16.8%, again well above forecasts for a 3.9% increase. The strength marks a sharp reversal from November, when orders had slumped 11% on the month and fallen 6.4% year-on-year.
The scale of the rebound suggests November’s weakness was more a reflection of volatility than a meaningful deterioration in investment appetite. Machinery orders are often lumpy, but the magnitude of December’s rise points to solid underlying corporate demand. The data bode well for production and output in the months ahead, reinforcing expectations that Japan’s economy will continue expanding in line with the BOJ’s projections.
The strong capex signal also comes against a backdrop of equity market strength. Japanese stocks have been rallying amid expectations of expansionary fiscal policies under Prime Minister Sanae Takaichi, while government bond yields have edged higher on speculation of increased debt issuance.
However, the upbeat machinery data contrast with a more cautious tone in broader corporate sentiment. A recent Reuters survey showed two-thirds of Japanese firms remain concerned about fiscal discipline under the current administration
