TOKYO (AFP) - Japan's factory output in January soared 4.0 per cent on-month, official data showed on Friday as companies looked to meet increased demand ahead of a sales tax hike.

The reading beat economists' predictions of a 3.0 per cent rise and was much higher than a 0.9 per cent rise in December.

"Industrial production continues to show an upward movement," the ministry of economy, trade and industry said in a monthly report.

The report also showed manufacturing companies plan to slash their production by 3.2 per cent in March after raising it by 1.3 per cent in February.

Economists have said that despite tepid demand for Japanese goods from abroad, higher domestic demand for big-ticket goods such as cars has forced firms to increase output ahead of an April sales tax rise.

The sales tax will increase to 8 per cent from the current 5 per cent.

Production figures are a key yardstick for the success of Prime Minister Shinzo Abe's policy blitz, dubbed "Abenomics", aimed at stoking growth in Japan's long-lumbering economy.