Japanese economy sinks deeper into recession
Jobless rate at 3-year high, job availability at 5-year low
TOKYO: Japan’s industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis and the jobless rate hit a three-year high, underscoring the broad economic pain caused by the coronavirus.
The world’s third-largest economy is bracing for its worst postwar recession, hurt by coronavirus lockdown measures at home and overseas that have upended supply chains, kept businesses shut and depressed consumer spending.
Ministry of Economy, Trade and Industry (Meti) data out yesterday showed that factory output fell 8.4% month-on-month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.
“The economy likely suffered a big contraction in April-june due to weak domestic and external demand,” said Taro Saito, executive research fellow at NLI Research Institute.
“Domestic demand may look up from June, but exports will remain very weak, putting a drag on overall economic recovery,” he said, adding that the worsening of the economy would flow on to the labour market.
The deterioration in economic conditions has triggered an increase in the jobless rate and a fall in the number of available jobs, while stoking fears of bankruptcies.
The seasonally adjusted jobless rate rose to 2.9% in May from 2.6% in April, separate government data showed, the highest rate since May 2017.
While the jobless rate remained below 3%, less than in many advanced countries, economists say the actual figure is higher, given the rise in furloughed staff and the impact of discouraged workers who have stopped seeking jobs.
The coronavirus fallout has pushed 290 firms into bankruptcy since the end of February, with many service-sector firms like restaurants, hotels and inns and apparel suffering the most, data from private credit research firm Teikoku Databank showed.
The decline in factory output followed a 9.8% drop in the prior month, and was much bigger than the median market forecast of a 5.6% drop in a Reuters poll of economists, the data showed.
On a positive note, manufacturers surveyed by Meti expect output to rise 5.7% in June and 9.2% in July.
The government, however, left its assessment of industrial production unchanged, saying it was “lowering sharply”, the bleakest official view since late 2008.
Output of cars, production machinery, steel and other broad industries were hit hard by slumping demand at home and abroad due to the pandemic. All industries surveyed posted a fall in output.
Global production at Japan’s major automakers, including Toyota Motor Corp and Nissan Motor Co, slumped 62% in May from a year ago, following a 55% fall in April, as car demand plunged globally amid lockdowns to stop the virus. Japan’s economy shrank an annualised 2.2% in January-march. —