How firms invest on machinery is a key indicator of economic recovery

Core machinery orders, which were up 3.8% in November from the month before, are a key indicator of investment.

The latest figure reinforces the view that Japan's economic recovery will be based more on corporate than on consumer spending in months to come.

Analysts were divided over the impact of Monday's figures on interest rates.

Decisive factor?

The Bank of Japan is set to meet this week to discuss interest rates.

While some analysts argue that the better-than-expected order numbers will boost the chance of a rate rise, others are less sure.

"I don't think today's machinery orders number will be a decisive factor in the Bank of Japan's rate decision this week," said Takumi Tsunoda, an economist with Shinkin Central Bank Research.

However, Hidenori Kato, head of FX sales and trading at Societe Generale, said he thought the machinery order figures would be "the clincher", and that rates would increase.

The Bank of Japan meeting this week could see interest rates increase from their current level of 0.25%. The rate was set in July last year following six years of a zero interest rate policy.