By Tetsushi Kajimoto and Stanley White
TOKYO (Reuters) - Japan's core machinery orders unexpectedly rose for the fourth straight month in September and manufacturers grew more confident this month, suggesting the economy may be finally starting to gather speed after the hit from an April sales tax hike.
Thursday's data also offered an encouraging sign of firms starting to gradually ramp up on capital investment, seen as significant by the Bank of Japan for cementing a durable economic recovery.
The 2.9 percent month-on-month gain in core machinery orders, a highly volatile data series regarded as a leading indicator of capital spending in the coming six to nine months, follows a Reuters poll that showed still-fragile business sentiment.
The rise in core orders compared with a 1.9 percent drop seen in a Reuters poll of economists. Firms surveyed by the Cabinet Office also expect orders to fall 0.3 percent in the current quarter, after a 5.6 percent quarterly rise in July-September.
"Compared with weakness at households, corporate activity remains firm. Steady profits are providing incentives for firms to spend on investment. The key from now will be whether this will filter through households via wage growth," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"Still, given weak consumption, it is wise not to proceed with the planned tax hike next year."
The data come as speculation grew that Prime Minister Shinzo Abe would postpone the hike to cushion the economy and call a general election in an effort to lock in his grip on power.
The April tax hike pushed Japan into its worst slump since the global financial crisis in the second quarter. Abe has said he will make a decision on the tax hike after assessing third-quarter GDP data, due out Monday.
Japanese companies overwhelmingly want Abe to delay or even scrap the tax hike out of concern it will derail the recovery, a Reuters Corporate Survey showed.
In the Reuters Tankan survey, which closely tracks the Bank of Japan's influential tankan quarterly poll, the sentiment index for manufacturers rose to 13 in November from 8 in October, but they expect a drop back to 9 in February.
Sentiment among service companies slid for the second straight month to its lowest in a year, it showed, as retailers continued to feel the pain from a sales tax hike in April.
The Reuters poll canvassed 486 big firms, of which 264 replied from Oct. 27 to Nov. 10. The results do not fully reflect the BOJ's Oct. 31 monetary easing, which stunned markets, pushing up Tokyo shares and weakening the yen.
(Reporting by Tetsushi Kajimoto; Editing by Shri Navaratnam)