Japan's economy is enjoying its strongest growth for decades

Business spending hit 17.7 trillion yen ($145bn; �73bn) for the first three months of 2007 - a rise of 13.6% compared with the same period in 2006.

The rate of increase was less than that seen in the three months to December, but above market forecasts.

The latest data makes another interest rate rise likely, analysts say.

Japan's economy - the second largest in the world - has recently been boosted by stronger exports and more consumer spending.

After maintaining a zero interest rate policy for a decade, Japan's central bank increased the rate to 0.25% last July and then to 0.5% in February this year.

"The economy continues to get support from robust corporate earnings and very low interest rates," said Takuji Aida, chief economist of Barclay's Capital.

Corporate profits also rose for the period, increasing by 7.4% compared with the same three month period a year earlier.