Japan's industrial output fell a seasonally adjusted 0.3 percent in March from the previous month, due mainly to sluggish shipments of electrical machinery and petroleum products, the government said Thursday.

The figure was better than the average market expectation of a 2.3 percent drop, according to Japan's (Kyodo) News Agency.

But it marked the second consecutive month of decline, a sign of a slower than expected rebound in the world's third largest economy as Japan struggles to fully recover from the impact of last year's consumption tax hike.

The index of output at factories and mines stood at 98.6 against the base of 100 in 2010, the Economy, Trade and Industry Ministry said in a preliminary report. It maintained its basic assessment, saying that output is "showing signs of increase at a moderate pace."