Sales (JNNETYOY) increased 3.5 percent from a year earlier, a third straight monthly rise, the Trade Ministry said in Tokyo today. The median estimate of 15 economists surveyed by Bloomberg News was for a 1.4 percent increase. From a month earlier, sales gained 2 percent.

The Nikkei 225 Stock Average climbing to pre-earthquake levels and a government subsidy for buyers of fuel-efficient cars are aiding domestic demand, while declines in the yen have helped exporters. Gross domestic product may expand an annualized 1.7 percent this quarter after a 0.7 percent contraction in the final three months of last year, according to the median estimate in a Bloomberg News survey of analysts.

“The eco-car subsidy has made a big difference to spending on autos,” David Rea, an economist at London-based Capital Economics Ltd., said before the report. “As the outlook starts to brighten, we’ll see consumer spending rising further.”

A consumer confidence index is back at pre-quake levels and next week’s Tankan index of corporate sentiment may show that large manufacturers are less pessimistic, a Bloomberg News survey indicates.

To contact the reporter on this story: Andy Sharp in Tokyo atasharp5@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

http://www.bloomberg.com/news/2012-03-28/japan-retail-sales-beat-forecasts-as-consumer-confidence-returns.html

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