The government Wednesday revised its assessment of the economy upward in line with a better-than-expected rise -- 3.0 percent -- in industrial production for September reported earlier in the day.

The seasonally adjusted index of output at mines and factories rose from the previous month to 96.0 against the base of 100 for 2000, following a 0.7 percent decline in August, the Ministry of Economy, Trade and Industry said in a preliminary report.

The percentage rise for the reporting month surpassed market expectations of 1.5 percent growth.

With the improvement, the ministry revised its assessment of the economy upward to "there is a sign of recovery" from "unchanged."

It is the first upward revision since July, when METI changed its assessment to "unchanged" from "weakening."

It was the first time the expression "a sign of recovery" has been used since April and May 2002.

"We made the upward revision because we can it expect continuing robust production in the electronic parts and devices and automobile sectors as well as movement in personal computers," a METI official said.

However, he remained cautious, saying, "We need to closely observe the situation, as the trend of final demand is still unclear."

Analysts also forecast that the output expansion will probably continue for the time being.

"Industrial production is expected to hold steady, with robust exports as the driving force," said Tatsushi Shikano, a senior economist at UFJ Institute Ltd.

But Shikano said a further appreciation of the yen could hit exports and dampen the incipient recovery.