TOKYO (Bloomberg) -- Japan's machinery orders rose in April, as non-manufacturers sought to upgrade equipment in anticipation demand from the nation's consumers will keep expanding.

Orders climbed a seasonally adjusted 2.2 percent to 1.01 trillion yen ($8.3 billion) after falling 4.5 percent in March, the Cabinet Office said in Tokyo. The median estimate of 42 economists surveyed by Bloomberg was for a 4.5 percent gain.

Orders by service companies including retailer Takashimaya Co. rose at the fastest pace in six months, signaling economic growth is spreading from manufacturing. Consumer spending is set to accelerate this year, as the lowest jobless rate since 1998 fuels confidence in the world's second-largest economy. “With consumption looking increasingly more solid, more non-manufacturers are going to increase spending,” said Yoshimasa Maruyama, an economist at BNP Paribas Securities Japan Ltd. in Tokyo. “That spending will offset the slowdown in manufacturers' spending this year.”

Non-manufacturing orders excluding shipping and utilities climbed 5.9 percent, the biggest gain since October, led by retailers and finance and insurance companies. Orders by manufacturers fell 1.3 percent, the Cabinet Office said. “The trend in orders is still soft, but it's not unusual for Japanese companies to be conservative at the start” of the financial year, said Katie Dean, a senior international economist in Melbourne at Australia & New Zealand Banking Group Ltd. “The economy is Japan will continue to slowly improve.” -----------Bank lending

Companies are mainly using their own funds to invest, a separate report showed. Lending growth slowed for a fourth month in May, the Bank of Japan said. Loans excluding trusts rose 0.9 percent from a year earlier.

“Bank lending is still fairly positive,” said Dean. “It shows that monetary policy is still not restrictive in Japan.” The Bank of Japan's key overnight lending rate is 0.5 percent, the lowest in the industrialized world.

The yen traded at 121.26 per dollar in Tokyo from 121.07 before the reports were published. The yield on Japan's 10-year bond rose 3 basis points to 1.895 percent.

A report this week showed corporate outlays surged 13.6 percent to a record in the first quarter, prompting economists to say revised gross domestic product figures next week will show business investment was stronger than initially projected. ---------------U.S. rebound “Though the market has recently been cautious on the outlook for capital spending, we expect such bearish views to slowly adjust,” Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo, wrote in a report. “The biggest concern, the U.S. economy, appears to have hit bottom.”

A recovery in spending by Japan's consumers may gain momentum. The jobless rate fell to 3.8 percent in April, the lowest level in nine years, helping household spending rise for a fourth month, the longest winning streak in three years. “Job growth is accelerating on strengthening labor shortage perceptions,” said Takuji Aida, chief Japan economist at Barclays Capital in Tokyo. “The economy is likely to continue expanding on the back of increasing service consumption.”

Takashimaya, Japan's largest department store operator, is planning to spend 26.9 billion yen this year on revamping its stores to attract more customers.

Japan's economy probably grew at an annualized 3.2 percent pace in the first quarter, according to the median estimate of 22 economists surveyed by Bloomberg News, faster than the 2.4 percent the government initially estimated. The Cabinet Office will release revised GDP on June 11.