Japan’s industrial output plunged a record 8.5 percent in November from the previous month, as companies scaled back to cope with the recession, the government said yesterday.
The slump was even bigger than an initial estimate for a drop of 8.1 percent, and was the biggest fall since comparable records began in 1953.
Compared with a year earlier, output was down 16.6 percent, the Japanese Ministry of Economy, Trade and Industry said.
Japanese companies have invested heavily in expanding their production facilities in recent years to meet brisk demand, helping drive a recovery in the nation’s economy from the recession in the 1990s.
But with consumers tightening their belts worldwide amid a wave of layoffs, many companies — particularly carmakers — are now reducing their output to avoid being left with a glut of unsold products.
The recent strength of the yen is also a major headache for Japanese companies, whose overseas earnings are suffering as a result.
Japanese Prime Minister Taro Aso, however, played down worries about the currency’s rise, which he said had contributed to lower oil prices.
“No country has ever gone bankrupt because the value of its currency rose,” Aso said in parliament.
“As many capital goods made in Japan boast the world’s best quality, a rising number of deals are denominated in the yen,” he said.
Japan’s banks and automakers are in better shape than their US peers, Aso said.
“Our wounds are definitely minor compared with those in other developed countries [such as] the United States and Europe,” he added.
Japanese companies have laid off thousands of people, mostly temporary workers, in recent months in response to the country’s deepening economic woes.
As a result, Japan now needs “tenderhearted” capitalism to help socially disadvantaged people during the recession, Japanese Economy and Fiscal Policy Minister Kaoru Yosano said.
The idea of “the strong winning and the weak losing does not fit with Japanese society,” he said in parliament.