The economy grew a real 1.5 percent in the January-March period from the previous quarter, revised upward from the initially reported 1.4 percent, due to a rise in private inventories to deal with growing demand, the government said Wednesday.

The growth, measured in terms of gross domestic product, translates into an annualized expansion of 6.1 percent, revised upward from the earlier reported 5.6 percent rise, according to the Cabinet Office.

The 1.5 percent growth in real terms marked the eighth consecutive quarterly expansion, the longest GDP growth after nine straight quarterly rises were registered from the January-March period in 1995 to the January-March period in 1997.

The annualized 6.1 percent growth is the highest since the 7.4 percent expansion in the October-December period last year.

The annualized GDP growth exceeded 6 percent for the second straight quarter for the first time since the July-September and October-December quarters in 1989, when Japan was in the middle of its asset-inflated bubble economy.

This suggests that the economic recovery was taking hold in the later half of fiscal 2003.

"A rise in inventories such as automobiles and industrial machinery is the main factor behind the upward revision," an official at the Cabinet Office said.

The increase in inventories can be taken as a sign of companies' upbeat outlook in response to rising demand, the official added.

GDP is the total value of goods and services produced domestically. Real GDP data are adjusted for price and seasonal variations.

On a nominal basis, GDP for the January-March quarter grew 1.0 percent, revised upward from a 0.8 percent expansion initially reported, marking the fourth quarterly increase in a row.

In the reporting quarter, capital investment was revised downward to a 1.7 percent growth from the preliminary 2.4 percent rise in real terms and to a 0.9 percent expansion from the initial 1.8 percent rise on a nominal basis.