"A small rise in March would be consistent with the improvement in the business surveys and the stabilization in the export data," said Julian Jessop, economist with Capital Economics.

The consensus expects industrial production to climb 0.8% following a 9.4% drop the month prior, but it's still forecast to fall 34.7% from one year ago.

The Ministry of Economy, Trade and Industry, which releases the report, forecast a pickup in growth in last report covering February.

Jessop said although the METI's forecasts have been overly optimistic lately, there are some signs that improvement is on the way.

Kyohei Morita, economist with Barclays Capital, said the first increase in industrial production during the last six months will be support by a halt in the declines in demand for large-lot electric power.

Also, he said, companies have been successful in rapidly bringing down inventory levels.

"If inventories were in fact down for a third consecutive month, this would clearly be a positive sign for industrial production," he said.

Japanese industrial production will be released by the Ministry of Economy, Trade and Industry on Wednesday at 7:50 p.m. EDT.

By Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Ernest Hoffman, This email address is being protected from spam bots, you need Javascript enabled to view it

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