TOKYO, March 31 (Reuters) - Japan's factory output rose

at a better than expected pace last month, driven by increases

in production machinery and electronics parts, but a slowdown in

retail sales pointed to the growing strains for an economy

facing rising external risks.

Japanese companies are increasingly worried President Donald

Trump's protectionist policies would trigger a broader global

slowdown, with automakers at home bracing for the effects of

U.S. tariffs.

Industrial production rose 2.5% in February from the

previous month when it declined 1.1%, and was just ahead of a

median market forecast for a 2.3% rise, the Ministry of Economy,

Trade and Industry (METI) data showed on Monday.

The output of production machinery, including chipmaking

equipment, increased 8.2% from the previous month, while the

production of electronic parts and devices increased 10.1%,

according to the METI.

Manufacturers surveyed by METI expect seasonally adjusted

output to increase 0.6% in March and edge up 0.1% in April.

Separate data showed Japanese retail sales rose 1.4% in

February from a year earlier, less than a median market forecast

for a 2.0% rise. They rose 4.4% last month.

The relatively subdued domestic consumption points to a

difficult year ahead for the world's fourth-largest economy,

especially as Trump's blitz of tariffs against trading partner

countries drag on business investment and confidence.

Trump's announcement of a 25% additional tariff on auto

imports is particularly worrisome for policymakers in Japan

given its reliance on auto exports to the U.S.

Automobiles made up 28.3% of Japan's total exports to

the United States in 2024, the biggest ratio among all items,

according to Ministry of Finance data.

Production of motor vehicles rose 0.2% in February from the

previous month, according to the METI.