Industrial production in Japan rose for the first time in six months, indicating that a strong demand in Asia could help the economy recover next year.
Industrial production rose 1.0 percent, in line with market expectations, in November, the Ministry of Economy, Trade and Industry said on Tuesday.
Manufacturers also expect to boost production next year, helped by strong demand from Asia, supporting Bank of Japan's view that exports could increase next year.
BoJ had stated earlier this week that it expects exports to fall in the short term before picking up pace again.
Japan's economic recovery had been faltering as the effects of the government's stimulus and tax incentives faded, as well as the broader global economic recovery slowed down.
BoJ, however, continues to bank on the global recovery for demand to improve and relies less on domestic demand.
Domestic demand continues to be shaky as consumer prices are down on a year-on-year basis. However, the rise in international commodity prices is expected to drive up the prices of corporate goods moderately.
Exports were expected to more or less remain flat for the time being but improve, reflecting better conditions overseas.
The Ministry maintained that industrial output was moving on a weak note, stressing that production has recovered only moderately after steep declines in the past few months, Reuters reported.
Since today's data shows that the downward risks to the economy have eased, we now have a smaller chance of the BOJ easing its policy further as long as there are no wild market fluctuations caused by some overseas factors, Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute, told Reuters.
Japan's policy makers also continue to keep a close eye on the yen, as a strong yen could hurt the economy.