Japanese retail sales rose more than expected in February, indicating that consumer confidence is improving.

Retail sales rose 3.5% from the same month a year earlier, the Trade Ministry said. Analysts were expecting a jump of 1.3%.

Sales were up 1.9% in January compared to the previous year.

Analysts said the latest retail figures, in addition to a recovery in equity markets, showed that the Japanese economy was picking up.

The Nikkei 225, the main Japanese share index, rose to pre-earthquake levels this week.

"I think consumers feel more comfortable with the current situation," said Masamichi Adachi from JP Morgan in Tokyo.

A government subsidy for fuel-efficient cars has also been helping to boost domestic demand.

However, economists said the likelihood of consumption improving much further was low because of the lacklustre labour market.

"Based on this evidence, I would not say the household sector is improving, because labour union negotiations for higher pay are not going well," said Toshihiro Nagahama from Dai-ichi Life Research Institute.

"The move in February is more about government subsidies."

Source :bbc.co.uk