Japan's economy contracted less than expected in the last quarter, showing stronger signs of recovery from the earthquake and tsunami in March.
The Cabinet Office said the economy shrank by an annualised rate of 1.3% in the three months to the end of June. It shrank 0.3% from the previous quarter.
Most forecasters were expecting drops of about 2.6% and 0.9%.
The BBC reports the figures should boost optimism that Japan will emerge from recession.
The yen gained against the US dollar on the news, while Nikkei 225 stock index in Tokyo opened 1.6% higher.
Japan's economy has contracted for three consecutive quarters. A recession is defined as two consecutive quarters of contraction, or shrinking economic output.
The earthquake and tsunami on 11 March destroyed large parts of the north-eastern coast, causing a nuclear crisis at the Fukushima power plant.
That caused electricity shortages at factories, and disrupted supply chains for many Japanese manufacturers.
In an effort to help manufacturers and underpin a recovery, the government and the Bank of Japan intervened in the currency markets on 4 August to weaken the yen.
