TOKYO (Reuters) -Japan's factory output grew more than expected in March, government data showed on Tuesday, thanks largely to automakers resuming production after safety scandals.
Industrial production rose 3.8% in March from the previous month, the Ministry of Economy, Trade and Industry (METI) showed, better than the median market forecast for a 3.5% rise.
"Coupled with solid output forecasts for April and May, the strong rebound in industrial production in March suggests that the likely slump in GDP in Q1 should be followed by a strong rebound this quarter," said Gabriel Ng, assistant economist at Capital Economics.
Motor vehicle production rose 9.6% in March from the previous month. Output in regular passenger cars and regular trucks boosted the overall figures.
Japanese automaker Toyota Motor (NYSE:TM) restarted production of some models in early March after irregularities in certification tests were found in affiliate Toyota Industries (OTC:TYIDF)' diesel engines.
Toyota's small-car unit Daihatsu, which was mired by misconduct related to rigged collision-safety tests, has gradually resumed vehicle production from February onwards.
"We'll continue to monitor the global economy and the resumption of plant operations by the automobile industry," a METI official said.
The manufacturing of production machinery, including semiconductor production equipment, went up 11.6%. Electronic parts and device output increased 9.2%, according to METI.
Manufacturers surveyed by the industry ministry expect seasonally adjusted output to increase 4.1% in April and expand 4.4% in May.
However, the METI official said a prolonged production disruption at Toyota's domestic plant over quality checks for Prius cars could put downward pressure on factory output in April.
Separate data showed Japanese retail sales expanded 1.2% in March from a year earlier. The result was below the median market forecast for a 2.2% rise but marked the 25th consecutive month of expansion.
Compared with the previous month, retail sales shrank 1.2% in March, following a 1.7% gain in February, the data showed.