Japan's industrial output in June expanded 2.0 percent from the previous month, led by shipments of motor vehicles on the back of solid demand in both domestic and overseas markets, government data showed Monday.

The seasonally adjusted index of production at factories and mines stood at 105.3 against the 2020 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The increase followed a revised 2.2 percent contraction in May.

The ministry maintained its basic assessment for the reporting month, saying industrial production was "showing signs of moderately picking up," while forecasting a dip in July and recovery in August.

Of the 15 industrial sectors the survey covers, output in 10 increased whereas production in five dropped.

Among the 10 sectors reporting rising output, motor vehicles surged 6.1 percent, propped up by transmission, steering and other parts as well as trucks.

Production of electrical parts and devices also contributed to the overall rise with a 6.8 percent increase due to brisk demand for smartphone components and recovering demand for integrated circuit memory chips.

The output of production machinery rose 0.2 percent, led by semiconductor manufacturing equipment due to solid exports, a ministry official said.

Among the sectors reporting decreased output, petroleum and coal products declined 5.3 percent and pulp, paper and paper products shed 2.1 percent due mainly to regular maintenance and repair work at some major plants, according to the ministry.

The index of industrial shipments rose 1.5 percent to 104.8 for the first increase in three months, while that of inventories fell 0.1 percent to 105.5.

Based on a poll of manufacturers, the ministry expects output to decline 0.2 percent in July and climb 1.1 percent in August.

The official pointed out the need to closely monitor the effects of downside risks in overseas economies and the impact of high prices.