Japan's factories extended their expansion in output to a second month in July as motor vehicle production improved, marking a positive start to the third quarter for manufacturers and broader economic activity.

Separate data showed retail sales grew for a fifth straight month in July, adding to hopes that the world's third-largest economy will benefit from resilience in spending by consumers in the current quarter.

Factory output rose a seasonally adjusted 1% in July from a month earlier, official data showed on Wednesday, extending the prior month's near double-digit surge.