Japan's economy expanded at its fastest pace in a year in three months from January to March as business investment rose slightly.
However goods piling up in factory warehouses posed a potential challenge to policy makers seeking to end years of deflation.
Private consumption, housing investment and exports all rose but at a weak pace, leaving Tokyo with more work to do two years after a radical monetary stimulus programme has brought only scant success.
The world's third-largest economy expanded at an annualised rate of 2.4% in the first three months of this year.
This was better than a median market forecast for a 1.5% increase and a revised 1.1% expansion in the fourth quarter, data from the Cabinet Office showed today.
The second quarter of expansion in gross domestic product in a row exceeded an annualised 0.2% gain in the US and 1.6% growth in the euro zone, a sign Japan is steadily emerging from last year's recession.
The data will be closely scrutinised at the Bank of Japan's two-day rate review that ends on Friday. The central bank is widely expected to maintain its massive stimulus programme and rosy assessment of the economy.
Today's figures show that private consumption, which accounts for roughly 60% of GDP, rose 0.4%. Capital spending also grew 0.4%, below an expected 0.8% gain but marking the first rise in four quarters.
The pick-up in business investment is seen as crucial to sparking sustained economic growth and inflation, so the latest numbers should come as some relief to policy-makers.
But the mixed signs from the data underscore a long-time dilemma for policymakers struggling to reflate the economy out of nearly two decades of deflation.
A deflationary mindset from years of falling prices has meant that companies and households remain reluctant to boost spending, even as the weak yen bolstered revenues and led to an increase in job and wages.
Japan's Economics Minister Akira Amari said a clear end to deflation won't come unless companies start to take more risks and invest.
"It's important that corporate executives wipe off their deflationary mindset," he told reporters after the data, complaining that some weakness remained in capital expenditure.
"In terms of sentiment, Japan hasn't emerged from deflation yet," he added.
