MercoPress. South Atlantic News Agency

Japan’s industrial output plunges record 15.3% and household spending 8.5%

The fall in output (particularly extended in the automobile industry) was worse than the previous record drop of 8.6% in February 2009, when Japan experienced its worst post-war economic recession ami

Japan's industrial output fell a record 15.3% in March from the previous month, while household spending tumbled the government announced Thursday, direct result of the earthquake impact and ongoing nuclear crisis.

The fall in output (particularly extended in the automobile industry) was worse than the previous record drop of 8.6% in February 2009, when Japan experienced its worst post-war economic recession amid the global financial crisis. Japan began releasing comparable output data in February 1953.

Household spending was down a steep 8.5% from a year ago, worse than an expected 6.4% decline and the worst fall since comparable data was available in January 1964.

“The outcome revealed how severe the damage was to Japan's supply chain, especially that of the auto industry,” said Daiwa Institute of Research economist Hiroshi Watanabe. “It's hardly likely that output levels will recover to that of February's by the end of this year,” he said.

For the quake-hit parts of northern Japan, output was down 31.9%, the government said.

Toyota, Nissan and Honda world leaders cut their production by half and don’t expect much change in the coming six months. The industry has been hit not only because of power rationing but also because of lack of parts and spares. Small suppliers also suffered the impact of the tsunami.

Economy Minister Kaoru Yosano called the industrial production number “shocking”, according to the Nikkei.

But manufacturers offered a more upbeat forecast for the immediate future in the expectation that recovery and reconstruction spending will boost demand. They said they expect their output to rise 3.9% on month in April and then increase 2.7% in May, according to the data, released by the Ministry of Economy, Trade and Industry.

Output in January-March declined 2.0% from the previous quarter, marking the third consecutive quarterly drop, the data showed. The result marked the longest losing steak since the four-quarter run of contractions between April 2008 and March 2009.

Although analysts expect the economy will regain steam in the latter half of this year on government and private-sector spending to rebuild the quake-hit region, the latest data add to signs that the immediate impact of Japan's disaster was severe.

In March, exports fell for the first time in 16 months due to slowed production, consumer sentiment posted its steepest-ever drop, and retail sales fell at their second-sharpest rate on record.

Separately last Thursday, the government reported that the jobless rate was 4.6% in March, better than an expected level of 4.8% and unchanged from February. But the figure excluded data from the three worst-hit prefectures from the March disaster given the difficulties in surveying households in the area.

March consumer prices continued their fall in March with the nationwide core consumer price index down 0.1% in March from a year earlier, marking the 25th consecutive month of decline as deflation persists. But the pace of the decline has narrowed in recent months largely due to a spike in oil and other commodity prices.