UPDATE 1-Japan's March factory output rebounds as car production jumps

* March output posts surprise rise as car output jumps

* Manufacturers see output up in April, down in May

* March unemployment rate 2.6%, jobs/applicants ratio 1.10

TOKYO, April 30 (Reuters) – Japan’s industrial output posted a surprise increase in March, as a jump in car production helped keep an economic recovery from last year’s deep coronavirus slump on track.

The output rise will likely ease worries about the impact the health crisis is having on the manufacturing sector in the world’s third-largest economy, which is recovering thanks to strong overseas demand, especially from China.

Separate data showed the jobless rate fell from the previous month in a sign of strength in employment conditions, while the average number of available jobs per applicant rose slightly.

Government data released on Friday showed factory output grew 2.2% from the previous month in March, lifted by a sharp jump in car production and higher output of organic and inorganic chemicals.

The output rise, a reversal from the previous month’s 1.3% decline, was much better than a 2.0% decline forecast in a Reuters poll of economists.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to rise another 8.4% in April, followed by a 4.3% decrease in May.

The government kept its assessment of industrial production unchanged, saying it was picking up.

Factory output had dropped in February as weakening production across sectors such as cars and electrical machinery outweighed better demand for tech-making equipment that has been a major output driver.

Japan’s economy is expected to take a hit from a third state of emergency for Tokyo and other areas called by the government last week in response to a resurgence of COVID-19 infections.

The measures, which are scheduled to last until May 11, are expected to especially hurt the services sector as households are seen cutting down on leisure and dining out activities, likely signalling a slowdown in domestic demand.

Other official data out on Friday showed the country’s seasonally adjusted jobless rate fell to 2.6% in March, beating the median estimate of 2.9%.

The labour ministry said the jobs-to-applicants ratio was 1.10 in March, up from 1.09 in the previous month and also above a Reuters poll forecast of 1.09.

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