Industrial production in Japan rose 1. 2 percent in March from a month earlier, according to revised data released Wednesday by the Ministry of Economy, Trade and Industry (METI).

The sharp rise from a preliminary reading of 0.3 percent for the month has been attributed to increased demand for Japanese passenger cars and electrical machinery and marks the first month- on-month increase in two months, the METI said.

Shipments in March were upwardly revised from 1.6 percent to 2 percent and the decline in inventories-shipments ratio rose to a revised 5.5 percent from a preliminary 5.2 percent, according to the data.

Additionally, the drop in inventories remained unchanged at 1.6 percent in March.

The capacity utilization index was up 0.6 percent in March from a month earlier to a seasonally adjusted 90.6 against the 2005 base of 100, the ministry said.

Compared to a year earlier, production rose a revised 31.8 percent in March from a preliminary reading of 30.7 percent.

The Cabinet Office confirmed Japan's economy is improving and upgraded its assessment of the overall economy for the fourth straight month this week as machinery orders shot up 5.4 percent in March and consumer sentiment hit a 3-year high in March.

Analysts said the revised data confirms Japan's output remains on an uptrend due to solid exports to Asia, in particular a strengthening economy in China, Japan's largest trading partner, has aided Japan's overall production rebound.

The Cabinet Office confirmed Japan's economy is improving and upgraded its assessment of the overall economy for the fourth straight month this week as machinery orders shot up 5.4 percent in March and consumer sentiment hit a 3-year high in the same period.