In August, Japan's factories increased output for a third consecutive month, as the manufacturing sector showed resilience amid high material costs and worries about a global economic slowdown.
Policymakers in the world's third-largest economy are worried about the US and other major trading partners' recession risks, which would make Japan more dependent on domestic consumption for growth.
In August factory output increased by 2.7% from a month earlier, extending rises in the previous two months, official data showed on Friday.
Retail sales increased sharply for a sixth consecutive month in August, while the latest jobs data showed tighter labour market conditions.
As far as August data shows, production activity was firm and production was on an upward trend, according to Koya Miyamae, senior economist at SMBC Nikko Securities.
There is a chance that production may stagnate in October-December due to the global economy slowing down. The firmer output of production machinery and iron, steel and non-ferrous metals helped lift the increase, which was much stronger than a median market forecast for a 0.2% gain expected by economists in a Reuters poll.
A 6.3% decline in motor vehicle production and a 6.3% slump in electronics parts and devices output helped offset a contraction in June and July, which swung into contraction after posting double-digit gains in June and July.
Toyota Motor Corp, the world's largest automaker by sales, reported a month-on-month decline in Japanese output in August, although global production rose.
The drop in electronic parts and devices production was due to the falling output of memory chips on weaker smartphone and personal computer demand, a government official said.
Japan's economy was expected to continue growing as consumers were likely to go out in the near future, despite worries about the negative impact of surging prices, according to Miyamae.
Retail sales increased more than expected, rising 4.1% in August from a year earlier, compared to a median forecast for a 2.8% gain in a Reuters poll.
Retail sales were helped by stronger sales at medicine and toiletry stores, as well as fuel, general merchandise, and fabrics apparel and accessories.
The seasonally adjusted jobless rate was 2.5% in August, compared with the previous month's 2.6%, while the availability of jobs was at 1.32, its highest since March 2020.