Japanese factory output falls 3.1% from September, as recession deepened;
Report and analysis by Elliot Gotkine of Bloomberg News
Video courtesy of Bloomberg News Video
Japan deepened into unprecedented export recession last month as manufacturers sharply cut back production, consumers spending dropped and jobless rose. The Trade Ministry said today that Factory output fell 3.1% from 1.1% in September. Household spending fell a worse-than-expected 3.8%, drops for eight consecutive months.
Exporter companies plan to cut its production output by 6.4% this month and will cut further by 2.9% in December as global financial crisis worsens. Japan’s exports tumbled 7.7% last month, the fastest pace in seven years, while exports to Asia, half of total Japan’s shipments, fell for the first time since January 2002.
Companies plan to fire at least 30,067 temporary and part-time workers by March 31 next year. Toyota Motor Corp., the world’s second biggest carmaker, will lay off half of its temporary staff. The Company will cut 3,000 contract staffs and slashed output by 17% in October. The Company reduced its net profit full-year forecast to ¥550 billion, or $5.5 billion - about a third of last year's earnings.
The Electronic Giant Panasonic became the latest victim to the global whiplash. It revised its annual profit forecast by 90% yesterday.
The Government said Japan’s inflation slowed for a second month. Consumer prices excluding fresh food rose 1.9% from a year earlier.
Meanwhile, Japan's unemployment rate stood at 3.7 percent in October, down a slight 0.3 percentage point from the previous month and better than a market forecast of 4.2 percent.
The number of jobless in October totaled 2.55 million, a decline of 160,000 from a year earlier, the Ministry of Internal Affairs and Communications said Friday.
The bleak Japanese output data followed China's warnings on Thursday that the world's fastest-growing major economy was in a sharp slowdown that threatened its stability, and a drop in euro zone business sentiment to a 15-year low that prompted calls for a big cut in the region's interest rates.
Some economists saw Japan's economy shrinking for a full year, which would be the country's longest ever contraction.
Japan tackled its last decade-long spell of deflation with a policy of massively inflating banks' balances with zero-interest cash, but analysts are divided whether the central bank is ready to drive its rates, now at 0.3 percent, to zero again.
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Sources :
- Bloomberg: Japan’s Recession Deepens as Factory Output Slumps (Update1),November 28, 2008 02:33 EST
- The International Herald Tribune: Japanese manufacturers sharply cut back production, November 28, 2008
- Reuters: Japan output fall worse than expected, November 28, 2008 3:57am EST
- Bloomberg News Video: Video: Japanese Factory Output Falls 3.1% From September, 28 November 2008 14:23:41
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