The upward revision to Japan's growth in the July-September quarter amplified the impact of a rush by car buyers to use expiring subsidies and smokers who stocked up on cigarettes ahead of a tax hike during the period.

The hottest summer on record also drove sales of items such as air conditioners, helping spur growth in the quarter. Private consumption accounts for around 60 percent of gross domestic product.

Japan's annualised economic growth in the July-September quarter was revised up to 4.5 percent from an initial estimate of 3.9 percent, data showed, beating estimates of a upward revision to 4.1 percent.

On a quarterly basis, growth was revised up to 1.1 percent from 0.9 percent.

But analysts warn of a possible contraction in the fourth quarter in the absence of such one-off factors, amid increasing signs that Japan's fragile recovery from recession is slowing as export growth cools.

The health of the trade-reliant economy continues to draw concern as exports, its main engine for growth, slow because of a strong yen and waning overseas demand while domestic demand remains soft.

Japan's economic fiscal policy minister Banri Kaieda told reporters Wednesday that he expected growth to be "substantially lower" in the fourth quarter amid signs that companies are cutting back on investment.

Fears that Japan's recovery is heading for further slowdown deepened Wednesday as data showed the nation's trade with the world rose only slightly and machinery orders, a key corporate spending indicator, fell in October.

"The outlook is cloudier," said consultancy Capital Economics in a research note. "The weakness of machinery orders at the start of the quarter is certainly discouraging."

October exports grew at their slowest pace of the year after the yen traded at 15-year highs against the dollar, hammering the competitiveness of the crucial sector.

A strong yen not only makes Japan's growth-driving exports more expensive but erodes companies' overseas profits when repatriated, with many firms considering sending more production overseas as a result.

It also makes imports cheaper, contributing to a damaging cycle of deflation in which falling prices prompt consumers to hold off on purchases in anticipation of further drops, clouding future corporate investment.

Japan has reduced its official interest rate to almost zero and last month passed an extra budget worth 58 billion dollars to cover a new stimulus package aimed at averting the threat of a "double-dip" recession.

Prime Minister Naoto Kan's second stimulus package since he came to power is designed to ease concerns over deflation and a strong yen, and includes job programmes, welfare spending and assistance for small businesses.

Kan took office in June promising to slash spending and work towards cutting the country's massive public debt, accounting for nearly 200 percent of gross domestic product, by avoiding issuing new bonds to pay for stimulus measures.

But the state of Japan's economy has complicated his ambitions.

Thursday's data also reaffirmed that China remained on course to unseat Japan as the world's number two economy for the year as a whole.

Japan stressed that its 3.96 trillion dollar economy was ahead of China's 3.95 trillion dollars over first nine months on nominal terms. But since the first quarter it has been outperformed by China, a trend that is expected to continue.

Japan remains more than 10 times richer on a per-capita basis, according to the International Monetary Fund.

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