TOKYO: Japan's factory output rose for a seventh straight month in September, data showed Thursday -- the latest sign the world's second largest economy is slowly recovering from a deep recession.
Industrial production increased 1.4 percent in September from August, extending its longest unbroken expansion in 12 years, as car makers boosted their output in response to recovering demand, the government said.
The rise beat market forecasts for a gain of 0.9 percent, and followed an increase of 1.6 percent in August.
Compared with a year earlier, industrial output was down 18.9 percent, reflecting a plunge in production at Japan's plants and factories since the global economic downturn began.
"The figures were stronger than expected despite earlier concern that the recent strong rebound would lose steam," said UBS economist Takuji Aida.
Production "is likely to continue a steady expansion to underpin a cyclical economic recovery," he said.
Japan's factory output rose 7.2 percent in July-September from the previous quarter, following an 8.3 percent jump in April-June.
Industrial production is expected to rise a further 3.1 percent in October and by 1.9 percent in November, according to the manufacturers' own forecasts, the ministry said.
Naoki Murakami, chief economist at Monex Securities, said it was "very likely that production will continue its steady recovery until late 2009," helped by strong demand from China and other emerging economies.
Japanese automakers, which idled plants and fired thousands of workers in response to a slump in demand, have been raising their production again as government incentives support sales of fuel-efficient vehicles.
"The continued solid gain in the industrial production confirmed that the underlying recovery trend of Japan's economy basically remains intact," said JP Morgan Securities economist Masamichi Adachi.
Japan sank into recession in the second quarter of 2008 as the global economic downturn battered demand for its cars, electronics and other exports.
Asia's biggest economy grew in April-June for the first time in five quarters, but weak domestic demand, renewed deflation and the negative impact of a strong yen on exports are casting a cloud over recovery prospects.
Unemployment is also a worry. Japan's jobless rate fell unexpectedly for the first time in seven months in August to 5.5 percent, after hitting a record high of 5.7 percent in July.
But analysts expect government data due out on Friday to show the unemployment rate rose to 5.6 percent in September.