By Daniel Leussink

TOKYO (Reuters – Japan’s factory output fell in December for the first time since November. The decline in the production of machinery outweighed a modest rise in the car production. It cast doubt over the economic recovery.

As low numbers of coronavirus cases encouraged shoppers, retail sales saw their third consecutive month of growth in December. However, record-breaking infections due to the Omicron strain of the virus are likely to have impacted consumer sentiment.

Decline in factory production by 1.0% from December 2013 was caused by lower output of general-purpose, production and machinery (including chip-making equipment)

This meant that the output fell for the first-time in three months, despite a forecast 0.8% drop in a Reuters poll.

According to the data, output growth in cars and other vehicle production slowed down to 1.5% from December before the November surge of 43.7% and October jump of 15.9%.

Major Japanese carmakers still have problems with shortages of chips.

Toyota Motor (NYSE:) Co., world’s largest car seller, stated this month that it expects production to be below its annual goal of 9,000,000 vehicles in the current year. This is due to the impact of the chip shortage.

According to the Ministry of Economy, Trade and Industry, (METI), manufacturers surveyed expected their output growth to be 5.2% for January and 2.2% for February.

According to the government, its industrial output assessment was unchanged. However, it indicated that there were signs of a pick up.

Retail sales rose 1.4% from one year ago to December, which was less than what the median market expected for 2.7% growth. Separate data also showed that retail sales fell below expectations.

It was the third consecutive month of retail sales increases, and this was attributed to a stronger market for food and drinks.