Japan's economy expanded an annualized real 6.0 percent in the three months ended September 30, marking its first increase in four quarters, the Cabinet Office said in a report on Monday.

On an inflation-adjusted basis gross domestic product (GDP) equates to a 1.5 percent increase from the previous quarter and follows an annualized 2.1 percent contraction logged in the second quarter and reported in September, the government report showed.

The cabinet office also said in their preliminary report that in nominal terms, or figures unadjusted for price change, GDP in the third-quarter expanded an annualized 5.6 percent, which is equivalent to 1.4 percent growth from the previous quarter.

"The positive growth came on the back of rapid restoration of nationwide supply chains after the disasters," economic and fiscal policy minister Motohisa Furukawa told a news conference on Monday.

The government also said that consumer spending, which increased a real 1.0 percent and comprises 60 percent of Japan's GDP, helped boost the economy as sentiment began to turn positive in the months following the March disasters.

There was a marked increase in purchases of eco-friendly vehicles, the government said, ahead of the expiration of its incentive program and tobacco purchasing prior to a tax hike, coupled with a rise in drinks and summer clothing purchases, as the nation rationed its power consumption due to an electricity shortage sparked by the March quake and tsunami, also contributed to the Q3 expansion.

The cabinet office also noted that corporate capital spending rose 1.1 percent and non-residential investment increased 0.8 percent, following a 1.8 percent rise in the previous quarter. Residential investment gained 1.3 percent after contacting 0.8 percent in the second quarter, according to the latest data, but public investment dropped 2.8 percent in the recording period, the office said.

The expansion was also attributed to a moderate rise in industrial production as Japanese manufacturers have seen output levels return to full capacity following the March disasters that devastated regions of the country's eastern seaboard and severely disrupted domestic and global supply chains.

"The level of real GDP has now returned to pre-quake levels," said Takuji Aida, senior economist at UBS AG.

"Reconstruction spending will help offset pressures from the slowdown in the European economy," he said.

The government report also showed that exports grew at a rate of 2.4 percent in the recording period, against a backdrop that sluggish global demand and adverse moves in currency markets.

Despite modest gains in exports and production, however, economists have warned that the rebound may lose momentum as the nation struggles to combat a persistently strong yen, which has forced some firms to move manufacturing operations from Japan to more economically viable countries, seen firms' overseas profits eroded on unfavorable exchange rates and stripped companies here of their competitiveness in global markets.

Japan intervened in currency markets last week to cool the yen which advanced to its highest level since a prior intervention on Oct. 31, as the yen peaked at a postwar record high of 75.35 against the U.S. dollar, causing Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi to jointly say that they would take " any and all measures" to combat the yen's rise and protect the nation's fragile export sector.

Azumi said that recent short-term moves in money markets have been "speculative" and "one-sided" and that investors have been making large bets to achieve quick profits.

Other downside risks, aside from the yen's strength, include the impact of recent floods in Thailand on Japanese manufacturers and an increasingly turbulent eurozone as it struggles to deal with its sovereign debt woes.

Median economists' forecasts are now for Japan's economic growth to slow to 0.2 percent in the fourth quarter.

"The situation surrounding our country's economy is becoming tougher as we see the recovery in overseas economies weakening and face the impact of the Thai flood, in addition to the yen's rapid rise," Furukawa said of the situation earlier on Monday.

Gross domestic product refers to the market value of all final goods and services produced within a country in a given period and is the total value of goods and services produced domestically.

Japan's economy remains the third-largest in the world after China and the United States.