Japan Industrial Production Up 2.5 Percent In Dec.

Challenged by opposition lawmakers to explain how Japan can afford to boost spending when its national debt is already twice the size of the economy, Abe insisted his plan would balance the national budget by 2020. He also defended his administration's reliance on public works projects.

"I intend to have a deep discussion of the plans and seek public understanding to ensure transparency," Abe said during the televised legislative exchange.

Higher tax revenues are expected to help offset some of the increased spending: Earlier this week the government raised its forecast for economic growth in the fiscal year that starts April 1 to 2.5 percent from 1.7 percent.

While higher government spending can boost demand in the short run, growth can only be sustained through corporate investment, job creation and rising purchasing power.

Figures released by the Ministry of Health, Labor and Welfare on Thursday, however, showed average monthly wages, including overtime and bonuses falling to 314,236 yen ($3,453), the lowest level since such data became available in 1990.

The ministry, which based the data on a survey of 33,000 companies, attributed the drop to the rising use of part-time or temporary workers, who accounted for nearly 29 percent of all workers in 2012.

December's increase in industrial output compared with a month-on-month drop of 1.4 percent in November. Most analysts had forecast an improvement of more than 4 percent in December.

METI said inventories fell 1.1 percent from the month before while shipments rose 4.4 percent.

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