* Oct core orders +0.6 pct, matching f'cast
* Data shows better chance of sustained economic recovery
* Some analysts cautious of outlook on tax hike pain
By Leika Kihara
TOKYO, Dec 11 Japan's core machinery orders rose
0.6 percent in October, rebounding from a fall in the previous
month and boding well for stronger capital expenditure -- a key
element in sustaining the current economic recovery.
The data may heighten the view that Japan's economy will
accelerate next year after weathering the pain from an increase
in the sales tax hike in April.
The rise in core orders, a highly volatile series regarded
as a leading indicator of capital spending, matched the median
forecast from a Reuters poll and marked a turnaround from a 2.1
percent decline in the previous month.
"Corporate earnings are improving and companies have held
back on investment for so long that capex will continue to
recover," said Norio Miyagawa, senior economist at Mizuho
Securities Research & Consulting.
"The positive economic cycle of export growth leading to
capital expenditure, more jobs and higher wages is working."
Compared with a year earlier, core orders increased 17.8
percent, against the median estimate for a 15.0 percent gain.
Capital spending has been a weak spot in Japan as Prime
Minister Shinzo Abe struggles to spur business investment and
wage increases at many companies, which remain unconvinced that
his reflationary policies will have a lasting impact.
The economy is now enjoying a temporary boost from increased
demand ahead of an increase in sales tax, but many economists
say capital expenditure will need to grow faster next year to
help the economy achieve self-sustaining growth.
Japanese business confidence improved in the three months to
December and is predicted to continue rising, a Reuters poll
showed on Monday, adding to evidence of a steady recovery in the
world's third-largest economy.
The positive outcome suggests the central bank's closely
watched "tankan" quarterly survey, due out on Dec. 16, will show
a continued recovery in business sentiment as the benefits of
Premier Abe's stimulus policies broaden.