Data showing a surge in Japanese machinery orders is a sign that Japan Inc. is finally moving into expansion mode, just what's needed to boost the country's long-term growth prospects, analysts say.
Core machinery orders, a volatile number seen as an indicator of capital spending by corporates in the months ahead, soared 9.3 percent in November from a month earlier, marking a second straight month of gains.
(Read more: Abenomics scorecard: 'A' for early initiative, 'C' for follow-through)
It was the fifth biggest increase on record and well above expectations for a 1.2 percent rise by economists polled by Reuters.
"The data tells you that Japan has its mojo back," Jesper Koll, managing director and head of Japanese equity research at JPMorgan Securities, Japan told CNBC Asia's "Squawk Box." "It tells you that corporate Japan's animal spirits are alive and firms are investing in the future."
Economists say corporates investing more and raising wages are crucial to the success of Japanese Prime Minister Shinzo Abe's plans to revive an economy that has spent much of the past 20 years mired in deflation and slipping in and out of recession.
500px.com/AnthillTiger | Flickr Open | Getty Images
Against that backdrop, companies have been slow to ramp up spending.
"The corporate sector needs to be reengaged in the economy," Sean Darby, chief global equity strategist at Jeffries, told CNBC on Wednesday.
"It has $2 trillion sitting on its balance sheet and it needs to be spending money on new investment, which we're starting to see in new machinery orders and it needs to start raising wages and passing on some of the productivity gains," he added.
(Read more: Nikkei at 25,000? Nomura thinks so)
Wage hike please
Analysts note some positive developments for Abe's economic plans, known as Abenomics, in terms of corporates' plans for wage hikes.
(Read more: Why wages in Japan are set to rise: Shinzo Abe)
Frederic Neumann, co-head of Asian economic research at HSBC, said base wages in Japan have stopped falling for the first time since May 2012.
