Japan's key composite economic index grew 1.3 points in March on month, marking the second consecutive month of expansion, the government said Wednesday.

The umbrella coincident indicators including readings of industrial output and retail sales stood at 96.5 against the 2005 base of 100 in the recording month, according to a preliminary report released by the Cabinet Office.

The index of leading indicators, which forecasts developments in the coming months, jumped 0.6 point to 96.6, while the index of lagging indicators, which reviews the economic performance in the past, climbed 0.5 point to 86.7.

The key composite economic index marked the first increase in two months in February, partly due to expanded car sales under the Japanese government's subsidies for the purchase of environment- friendly cars.