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Industrial production rose 1.5 percent in January-March from the
previous quarter, helping the world's third largest economy
expand much faster than expected.
But the central bank offered a cautious view on the outlook for
output, saying it may have briefly hit a soft patch as
automakers see domestic inventories build up and steelmakers
feel the pinch from sluggish Asian demand.
"Industrial production will increase moderately reflecting
domestic and overseas demand, albeit with some fluctuations,"
the BOJ said in a monthly economic report released on Monday.
The central bank also warned there was "high uncertainty" on its
forecast that output will rebound in the third quarter.
Japan has emerged from last year's recession as companies start
to increase capital expenditure and consumer spending recovers
from the pain of last year's sales tax hike.
Supermarket sales rose 5.7 percent in the year to May to mark
the second straight month of increase, data showed on Monday,
signaling the mood of consumers was brightening.
But soft exports are emerging as a headache for the BOJ,
weighing on output on casting doubt on the bank's forecast that
solid overseas demand will help the economy gain momentum later
this year.
The BOJ issues a summary of its economic assessment on the day
of its monetary policy decision, and releases a more thorough
report on economic components the following market day.
(Reporting by Leika Kihara; Editing by Kim Coghill)
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