Japan logged a modest pickup in factory output in March as the nation's unemployment rate hit a multi-year low, official data showed, with the government pointing to brighter times ahead.
The new figures also come days after the Bank of Japan (BoJ) boosted its inflation and economic growth projections for the world's third-largest economy as it eyes an end to years of deflation.
Analysts said the pickup signalled that the big spending and aggressive monetary easing policies under Prime Minister Shinzo Abe, dubbed "Abenomics", were having an impact as consumer and business confidence picks up and Japanese stocks soar on a weaker yen.
"Retail consumption is very strong," Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance, told Dow Jones Newswires.
"Not only due to warmer temperatures in March, but also as gains in stocks and expectations for an economic recovery buoy spending... This is an effect of Abenomics."
However Credit Agricole economist Yoshiro Sato cautioned that the "modest" March pickup underlined how a weakening yen -- which helps boost exporters' competitiveness -- is "not necessarily a silver bullet for production recovery unless real demand recovers both home and abroad".
March factory output rose 0.2 percent from the previous month, according to figures from the Economy, Trade and Industry Ministry, while the picture was even brighter on a quarterly basis with a 1.9 percent factory output increase between January and March from the previous three months.
"Industrial production shows signs of picking up at a moderate pace," the ministry said in a statement.
A survey of manufacturers released with the data painted a mixed picture -- producers expect industrial production to rise 0.8 percent in April before dipping 0.3 percent in May.
Also Tuesday, separate figures from the internal affairs ministry showed Japan's jobless rate stood at 4.1 percent in March, down 0.2 percentage points from the previous month, and the lowest level since November (Xetra: A0Z24E - news) 2008.
On Friday, the BoJ's semi-annual economic report estimated 2.9 percent growth in Japan's economy for the fiscal year to March, up from an earlier 2.3 percent projection made in January.
It also tipped inflation to hit 0.7 percent, also up from an earlier 0.4 percent projection, as Tokyo and the central bank ramp up their battle to reverse years of falling prices which have crimped private spending and business investment.
The BoJ held off announcing any new policy measures as it wrapped up its first meeting since unveiling a huge stimulus package earlier this month aimed at stoking the economy and beating years of falling prices.
The moves saw the central bank's new management team -- hand picked by Abe -- announce a series of measures including doubling the money supply, and vowing no let-up in the fight to conquer long-running deflation.
Deflation is bad for the economy because it encourages consumers to put off spending in the belief their intended purchases will be cheaper in the future, softening demand and hurting producers.
The yen has weakened by about a fifth since November, when Abe vowed in opposition ahead of landslide national elections to follow an aggressive monetary easing policy by ramping up spending and fuel inflation.
In Asian forex trade on Tuesday, the dollar bought 97.98 yen, well up from a record low around the 75 level in late 2011.
However, some economists have warned that the new policies may not reflate the economy and could lead to bigger problems down the line.
Years of ineffective pump-priming by successive governments have left Japan with a mountain of debt around twice the size of its economy, the worst ratio among industrialised nations.