The diffusion index of coincident economic indicators, a key gauge of Japan's economic activity, topped the boom-or-bust line of 50 percent in December, after falling below the line in November, the government said Monday.

The coincident index on the current state of the economy stood at 71.4 percent in the reporting month, after slipping to 30 percent in November for the first time in 19 months, the Cabinet Office said in a preliminary report.

A reading above 50 percent is considered a sign of economic expansion, while a reading below that level is taken as a sign of contraction.