Japan's core machinery orders recorded an unexpected 10.1 percent rise in August from the previous month, the fastest rise so far in this year. The total value of machinery orders received by a sample of 280 manufacturing firms operating in Japan surged by 9.8 percent month-on-month in August, building on increases of 5.7 percent in July and 9.2 percent in June, data released by the Cabinet Office showed. "There are some valid concerns over the outlook for the next few quarters, but the surge in machinery orders suggests that the long-awaited rebound in Japanese investment has at least begun," Capital Economics Chief International Economist Julian Jessop wrote in a note. "This should be an important support to GDP growth as the boosts from consumer spending and exports fade." The rise in core machinery orders, which excludes volatile orders from ship builders and power companies, was unexpected as a median market forecast had indicted a 3.7 percent drop. "The consensus (and ourselves) had expected some sort of pull-back in line with the usual see-saw pattern, but the upward trend in orders actually appears to be accelerating," wrote Jessop. However, Jessop cautions that the recent weakness of business confidence and the continued strength of the yen suggest may put brakes on a strong rebound in investment. "The faltering recovery in manufacturing output also means that the amount of spare capacity is likely to remain higher for longer. Nonetheless, investment spending still looks set to pick up from what is after all a very low base," he writes.

Source