The June decline was the first such in five months.
"Industrial Production in July increased 3.2 percent from the previous month, showing an increase for the first time in two months," the Ministry of Economy, Trade and Industry reported on its web site. "It showed an increase of 1.6 percent from the previous year."
"Shipments in July increased 1.3 percent from the previous month, showing an increase for the first time in two months. It showed an increase of 0.7 percent from the previous year."
A ministry survey of manufacturers said production is expected to increase in August and September amid "signs of picking up at a moderate pace." It said August output is expected to increase 0.2 percent and 1.7 percent in September.
"We are seeing production growing in line with the moderate recovery of the Japanese economy since the turn of the year," Kenji Tanaka, economist at the Development Bank of Japan, told Kyodo News.
However, Tanaka warned if overseas economies weakened in the fall it would affect Japan's exports, which in turn would affect output.