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Japan's industrial output rose 1.9% in June, government data showed on Friday, in a sign that demand is starting to pick up.
That compared with the median estimate for a 0.7% increase in a Reuters poll of economists.
Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.4% in July and increase by 2.3% in August, data showed.
The government changed its assessment of industrial production, saying it was stagnating but that some areas were showing recovery. Last month, the ministry simply said industrial output was stagnating.
Meanwhile, Japanese retail sales fell 1.4% in June from a year earlier, slightly less than a median forecast for a 1.5% decline, government data showed.