[TOKYO] Japan's core machinery orders unexpectedly rose for a second straight month in November, government data showed, although a renewed coronavirus emergency in Tokyo and 10 other areas may cool business appetite for capital spending.

The surprise gain in core orders, a key indicator of capital expenditure, could be a temporary relief to policymakers hoping for corporate investment to spur a private demand-led recovery in the world's third-largest economy.

The Cabinet Office data out Thursday showed core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, grew 1.5 per cent in November from October, led by increased demand for chip-making equipment and computers, possibly backed by people working from home.

It was a second straight month of gains and compared with economists' median estimate of a 6.2 per cent drop, following a 17.1 per cent jump in the previous month.

However, Japanese firms could grow cautious about boosting capital expenditure due to dwindling corporate profits, which could be further affected by a state of emergency implemented in Tokyo and 10 other prefectures through Feb 7.

Compared with a year earlier, core orders, which exclude volatile ships and electric power utilities, declined 11.3 per cent in November, the Cabinet office data found.

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By sector, orders from manufacturers fell 2.4 per cent month-on-month, while those from non-manufacturers grew 5.6 per cent from the previous month, the data showed.

The government raised its assessment on machinery orders, saying they showed a pick-up move. Previously it said orders had stopped falling.

Japan's economy rebounded sharply in the third quarter from its deepest postwar slump, thanks to pick-ups in exports and private consumption, which makes up more than half the economy.

But some analysts flagged the risk of a double-dip recession ahead given the current third wave of coronavirus infections.

REUTERS