Japanese retail sales have risen for the first time in nearly three years, providing more evidence of a long-awaited economic recovery.
Sales were up 0.8% from September, and 0.3% on last year, suggesting that Japanese consumers are starting to share market confidence in an upturn.
Personal consumption accounts for 55% of the world's second largest economy.
But a decade of stagnation has made Japanese shoppers reluctant to plough savings back into the economy.
The increase in consumer spending follows a range of indicators suggesting Japan may be beating its long run of underperformance.
Return to growth
The Organisation for Economic Cooperation and Development is now forecasting a 2.7% expansion for the Japanese economy in 2003, and consistent growth - albeit at lower levels - for the next three years.
That would mark a significant change in the fortunes of Asia's largest economy, which grew 0.2% last year, after years of recession and rising unemployment.
Economic insecurity after the boom years of the 1980s led to a crisis of confidence among Japanese consumers and a vicious circle of low domestic demand and falling prices.
But increased trade with the rest of Asia, especially emerging giant China, have boosted other sectors of the economy.
Earlier this month indicators showed industrial activity and trade up 2.2% in September, beating analysts' expectations.
Japan's trade with China is now slightly higher than trade with the US.
Early days
But analysts have warned it is too early to call an end to Japan's troubles.
A strong yen is still a drag on exports, while economic reforms promised by Prime Minister Junichiro Koizumi have proved difficult to realise.
Meanwhile increased growth will need to be higher and more sustained to start easing unemployment.
The boost in retail sales may have been affected by one-off factors, such as demand for winter clothing.
But there will still be comfort for Mr Koizumi in increased demand at department stores and supermarkets, the first increase in 14 and 16 months respectively.
New car sales showed the biggest increase, up 5.9% compared to the same time last year.
The Nikkei index of Japanese shares closed up 0.18 percent at 10,163.
Sales were up 0.8% from September, and 0.3% on last year, suggesting that Japanese consumers are starting to share market confidence in an upturn.
Personal consumption accounts for 55% of the world's second largest economy.
But a decade of stagnation has made Japanese shoppers reluctant to plough savings back into the economy.
The increase in consumer spending follows a range of indicators suggesting Japan may be beating its long run of underperformance.
Return to growth
The Organisation for Economic Cooperation and Development is now forecasting a 2.7% expansion for the Japanese economy in 2003, and consistent growth - albeit at lower levels - for the next three years.
That would mark a significant change in the fortunes of Asia's largest economy, which grew 0.2% last year, after years of recession and rising unemployment.
Economic insecurity after the boom years of the 1980s led to a crisis of confidence among Japanese consumers and a vicious circle of low domestic demand and falling prices.
But increased trade with the rest of Asia, especially emerging giant China, have boosted other sectors of the economy.
Earlier this month indicators showed industrial activity and trade up 2.2% in September, beating analysts' expectations.
Japan's trade with China is now slightly higher than trade with the US.
Early days
But analysts have warned it is too early to call an end to Japan's troubles.
A strong yen is still a drag on exports, while economic reforms promised by Prime Minister Junichiro Koizumi have proved difficult to realise.
Meanwhile increased growth will need to be higher and more sustained to start easing unemployment.
The boost in retail sales may have been affected by one-off factors, such as demand for winter clothing.
But there will still be comfort for Mr Koizumi in increased demand at department stores and supermarkets, the first increase in 14 and 16 months respectively.
New car sales showed the biggest increase, up 5.9% compared to the same time last year.
The Nikkei index of Japanese shares closed up 0.18 percent at 10,163.
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