Japanese production in historic plunge

Japanese production fell at the fastest rate on record in November as firms closed factories and cut jobs due to slumping demand brought on by the global economic crisis.

The government also said another 100,000 people were out of work compared with a year earlier and that more were set to lose their jobs as firms axe employees on temporary contracts.

Industrial output in the world's second largest economy plunged a record 8.1 percent in November from the previous month, the biggest drop since the Ministry of Economy, Trade and Industry began releasing the statistics in 1953.

It was much worse than market forecasts of a 6.7 percent fall.

Kaoru Yosano, the economy minister, warned that it was difficult to see when Japan would break out of its recession.

"The public, business people and politicians, we all must give our all so that the economy would not nosedive even below its lowest point," Yosano said.

Production is likely to continue falling, with the ministry expecting an 8.0 percent drop in December and another 2.1 percent decline in January, as the auto industry feels the pinch.

The data came as brand-name Japanese manufacturers, including Toyota Motor Corp., Sony Corp. and Canon Inc., lowered production and cut jobs to adjust to the fall in demand for their exports.

The meltdown is likely to continue for the time being, said Hiroshi Watanabe, economist at Daiwa Research Institute.

"We have been seeing economic data and forecasts downgraded every month," he said.

"From now on, I expect the weak exports will lead to a serious inventory adjustment. Shipments are weak, increasing the inventory. This in turn again lowers production," he said.

Japan relies on exports as the key driver of its economic growth, but overseas-bound shipments also fell at their fastest-ever rate in November.

Japan is bearing the brunt of weak demand around the world, said Takeshi Minami, chief economist at Norinchukin Research Institute.

The Bank of Japan, which last week cut its key rate to just 0.1 percent, "will probably face more calls for further monetary easing," Minami told Dow Jones Newswires.

'Figures are extremely serious'

Unemployment rose to 3.9 percent in November, worsening 0.2 percentage points from the previous month, the internal affairs ministry said Friday.

The figure was slightly below average market forecasts of 4.0 percent.

The number of people out of work increased by 100,000 from a year earlier to a total of 2.56 million.

The ratio of job offers to job seekers also fell to 0.76, meaning 76 jobs are available to 100 job seekers.

"These figures are extremely serious," Chief Cabinet Secretary Takeo Kawamura said.

He said the government would work hard to pass through parliament its record-high budget unveiled this week in a bid to boost the economy.

The job cuts have targeted mainly people on limited-term contracts or those who were recruited from temp agencies.

The Labour Ministry said that a total of 85,012 temporary workers have already lost their jobs or know they will be laid off by March.

The figure nearly trebled in a month, reflecting the rapid deterioration of the employment environment for people without permanent contracts, a health ministry official said.

"We expect the figure to rise even further towards the year end and the end of the fiscal year" in March, he said.

In other data, Japan said that core consumer prices rose 1.0 percent in November from a year earlier.

But prices eased by 0.8 percent from the previous month on lower energy prices, leading to concern that Japan may be relapsing into its decade-old scourge of growth-sapping deflation.

Consumer prices have been rising for more than a year, but most of the growth has been due to high energy and food prices.