Japan Factory Output Rises 1.4%

TOKYO -- Japan's factory output rose for the seventh straight month in September, as recovering global trade boosted demand for the country's cars and electronics.

Industrial production -- a key barometer of the country's economic health -- rose 1.4% from August and "continues to show an upward movement," the government said Thursday.

The figure outpaced a 1% rise forecast in a Kyodo News agency survey of economists. Strong gains among manufacturers of transport equipment, electronics parts and electrical machinery contributed to the gains, according to the Ministry of Economy, Trade and Industry's monthly report.

The latest numbers offer encouraging signs of growth in the world's second biggest economy, which fell into its worst recession since World War II earlier this year.

But the numbers didn't do much to excite investors in Japan as the benchmark Nikkei 225 index was trading about 2% lower as of 1 a.m. EDT.

Stimulus spending by governments around the world, particularly China, is reviving sales of Japanese products. Exports in September fell by the smallest margin in 10 months as a result.

At home, consumer incentives are also driving demand for eco-friendly appliances and cars.

Production is expected to continue expanding for the third straight quarter in October-December after posting a 7.2% rise in the July-September period. The ministry predicts output will grow 3.1% in October and 1.9% in November.

Shipments rose 3.4%, while inventories slipped 0.5%.

Still, some economists tempered their confidence of Japan's prospects with predictions the current growth may not last. The country's unemployment rate is stuck at a near-record high of 5.5% as companies remain wary of spending and hiring. Concerns about deflation are also intensifying after prices in Japan tumbled at a record pace in August.