Recession fears rise on Japan's output data

http://seattletimes.nwsource.com/html/businesstechnology/2008563230_japanoutput27.html

Japan's industrial output tumbled at a record pace last month, stoking fears that the world's second-largest economy was headed for a deeper and more protracted recession than previously expected.

By V. Phani Kumar

MarketWatch

HONG KONG — Japan's industrial output tumbled at a record pace last month, stoking fears that the world's second-largest economy was headed for a deeper and more protracted recession than previously expected.

Industrial production fell as much as 8.1 percent in November from the previous month — the biggest drop in the measure since the government started releasing comparable figures in 1953 — as Japanese companies produced fewer automobiles and machinery on vanishing demand.

The drop was steeper than the 6.8 percent fall expected by economists, and came after a 3.1 percent decline in October.

"Industrial production in Japan is falling off the cliff," wrote Merrill Lynch Economist Takuji Okubo in a note.

"Adding to this massive cut in November is manufacturers' plan to cut even further in the next two months. They now plan to cut their production by 8 percent in December and by 2.1 percent in January," Okubo added, referring to the result of a survey published by the Japanese Ministry of Economy, Trade and Industry.


The survey findings showed that transport equipment, including cars and trucks, ranked among the top three contributors to the decline from November through January, suggesting the impact of weak automobile sales in the U.S. and elsewhere was severely hurting Japanese carmakers.

"With these cuts, the transportation-machinery makers will have cut their production by almost 40 percent between October and January," Okubo wrote.

Weakening industrial production also appears to be taking a toll on employment in Japan.

Official data released separately Friday showed Japan's seasonally adjusted jobless rate climbed to 3.9 percent in November, rising 0.2 percentage points from the previous month.

The number of unemployed people increased by 100,000 during the month to 2.56 million.

Economists had expected the monthly unemployment rate to jump to 4 percent.

Meanwhile, Japan's core consumer-price index, also released Friday, rose by a lower-than-expected 1 percent during the month on higher food charges.



The core data, which excludes fresh-food items because of their price volatility, had risen 1.9 percent in October.

The data estimated that consumer prices in the Tokyo metropolitan area could rise 0.8 percent in December from the year-earlier month.

Information from The New York Times is included in this report