By Stanley White
TOKYO (Reuters) - Japan's industrial output rose more than expected in November and companies forecast a further increase in December as robust overseas demand continues to support factory activity and broader economic growth.
The positive impulse was also seen in retail sales, which topped expectations last month as shoppers spent more on fuel, electronics, and cars in an encouraging sign for domestic demand.
The data support growing optimism among government officials and Bank of Japan policymakers that the economy can carry its recent run of strong growth into next year.
The 0.6 percent increase in industrial output in November was more than the median market projection for a 0.5 percent rise and followed a 0.5 percent gain in October.
Industrial output rose in November due to increased production of memory chips, equipment used to make semiconductors, and heavy machinery used in construction, trade ministry data showed on Thursday.
Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 3.4 percent in December but fall 4.5 percent in January.
The government raised its assessment of industrial output, saying it is recovering. Previously the government said output was only showing signs of a recovery.
Japanese retail sales rose 2.2 percent in November from a year earlier, more than the median forecast for a 1.2 percent increase, government data showed on Thursday.
A tight labor market and slowly rising wages are starting to lead to higher consumption, economists say.
Japan's economy has recorded seven straight quarters of expansion, the best uninterrupted run of growth since 1994. There are growing signs that this growth spurt will continue into next year, economists say.