TOKYO – Japan said Friday industrial output plummeted at the fastest pace on record in December while consumer spending slumped and unemployment hit a near three-year high as the recession deepened.
The global economic slowdown is crushing demand for Japanese goods, raising fears that Asia's biggest economy suffered its sharpest contraction in three decades in the fourth quarter of last year, analysts said.
Economics Minister Kaoru Yosano said it was "impossible to predict" when the Japanese economy would bottom out.
Industrial production plunged 9.6 percent in December from the previous month as firms idled factory lines in response to plummeting exports, the government said.
For the three months to December, industrial output fell 11.9 percent, reinforcing fears that the overall economy contracted sharply in the quarter.
Unemployment jumped to 4.4 percent in December from 3.9 percent in November as sliding corporate profits prompted a wave of layoffs. The last time the jobless rate was so high was in January 2006.
"I am extremely worried about industrial production," Yosano said. "Probably such a sharp decline was never experienced in the past and is likely to continue."
Manufacturers painted a bleak picture of the outlook, forecasting output would tumble 9.1 percent in January and a further 4.7 percent in February.
The projections were "particularly shocking," said Yoshiki Shinke, chief economist at Daiichi Life Research Institute.
Based on the figures, production looks set to plunge about 30 percent in the six months to March, dragging Japan's economy down more than expected, he said.
Analysts warn that Japan's economy looks set to log its worst quarter since 1974 in the wake of the oil crisis with a contraction of 10 percent or more on an annualised basis.
"A recovery in production is not likely to happen anytime soon, given that demand at home and abroad are not expected to pick up in the near term," said Hiroshi Shiraishi, an economist at BNP Paribas.
There were 2.7 million people without jobs in December, an increase of 390,000, or 16.9 percent, from a year earlier, the government said.
Household spending tumbled 4.6 percent in December from a year earlier as consumers tightened their belts.
Inflation slowed sharply in December as energy prices cooled and domestic demand weakened due to the country's first recession in seven years.
Core consumer prices rose 0.2 percent in December from a year earlier, compared with a 1.0 percent increase in November.
Core inflation peaked at 2.4 percent in July and August last year, but there are now concerns that deflation could return.
Japan is still recovering from a long deflationary spiral seen after its economic bubble burst in the early 1990s.
The current global economic crisis has battered demand for Japanese cars, electronics and other goods, pushing exports down a record 35 percent in December, according to earlier figures.
Japan's central bank has trimmed interest rates back down to 0.1 percent while the government has announced fiscal measures to revive the economy, but analysts say the impact on the overall economy is likely to be limited.
"Japan has little room to escape the downturn on its own as its monetary and fiscal policies are constrained by already low interest rates and a huge fiscal deficit, as well as political deadlock in parliament," Shinke said.
Investors took fright at the raft of grim data, pushing the Nikkei stock index down more than three percent in early trade.
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