The government on Monday upgraded its overall assessment of industrial activity for the first time since April, saying production is on "a slight rising trend," despite figures showing Japan's industrial output in June fell 0.7 percent from a month earlier.
The Ministry of Economy, Trade and Industry said industrial production in the April-June quarter rose 3.6 percent from the January-March period, up for the second consecutive quarter.
"We see overall industrial activity on a rising trend, considering the quarterly results and our forecasts of an upward tendency in July and August," a ministry official said. But "there is a concern over a downward trend as production depends on exports to the U.S., whose economy is still uncertain."
In June, the seasonally adjusted production index at mines and factories came to 96.1 against a 100-point benchmark established in 1995, according to a preliminary report.
It was the first decline in five months and was attributed to reduced production of cars and personal computers.
Shipments for June fell 2.2 percent from the previous month, marking the first decline in seven months. The seasonally adjusted index of shipments came to 99.0.
Inventories for June fell 1.7 percent from May, making it the first drop in two months. The seasonally adjusted index for inventory was 87.3 -- the lowest point since December 1988, when the index hit 86.2.
The seasonally adjusted inventory ratio -- inventories divided by shipments -- rose 2.7 percent on a month-on-month basis to 100.9, marking the first increase in four months. The ministry expects industrial output to increase 1.6 percent in July on a month-on-month basis due to strong demand for production machinery and electronic products, excluding personal computers.