Japan’s factory output picked up more than expected in September, with car output recovering as the economy continued its sputtering recovery and with policymakers watching developments with concern.

Industrial production gained 1.4% from August, led by cars and chemical product-makers, the Industry Ministry reported on Thursday. That beat a consensus estimate for a 0.8% increase, but output was still down 2.8% from a year ago.

For the third quarter, production slipped 0.4% from the previous period, potentially weighing on last quarter’s growth. The ministry also reported retail sales fell 2.3% in September from August, leaving them up only 0.5% from a year ago.