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| Version 1 | Version 2 |
|---|---|
| Big slump in Japan factory output | Big slump in Japan factory output |
| (10 minutes later) | |
| Japan's industrial output declined 9.6% in December - the biggest contraction since records began - as exports slumped due to the global downturn. | Japan's industrial output declined 9.6% in December - the biggest contraction since records began - as exports slumped due to the global downturn. |
| Japan's Economics Minister Kaoru Yosano said the situation was unprecedented and that the drop in factory output "was likely to continue". | Japan's Economics Minister Kaoru Yosano said the situation was unprecedented and that the drop in factory output "was likely to continue". |
| The unemployment rate also rose in December to 4.4%, a three-year high. | The unemployment rate also rose in December to 4.4%, a three-year high. |
| Official figures showed that 2.7 million people in Japan were without work, 400,000 more than a year ago. | Official figures showed that 2.7 million people in Japan were without work, 400,000 more than a year ago. |
| 'Bold steps' | 'Bold steps' |
| Japan's economy slipped into its first recession in seven years in the third quarter of last year. | Japan's economy slipped into its first recession in seven years in the third quarter of last year. |
| We must watch if a worsening of the economy pushes Japan into a deflationary spiral Tatsushi Shikano, Mitsubishi UFJ Securities | |
| Exports have dropped as worldwide demand for Japanese products, such as cars and electrical equipment, has fallen sharply. | Exports have dropped as worldwide demand for Japanese products, such as cars and electrical equipment, has fallen sharply. |
| Prime Minister Taro Aso has told parliament he will take bold steps to ensure Japan is the first country to emerge from the global crisis. | Prime Minister Taro Aso has told parliament he will take bold steps to ensure Japan is the first country to emerge from the global crisis. |
| The slump in industrial output knocked confidence among Japanese investors, and the country's main Nikkei index ended Friday down 3% or 257 points to 7,994. | |
| 'Continuing weakness' | |
| Also of concern is the fact official data further showed a big drop in the rate of inflation, increasing the likelihood of deflation. | |
| Japan's annual core consumer inflation slowed to 0.2% in December from 1% in November. | |
| Deflation is bad for an economy as falling prices encourage consumers to continue to put off making major purchases, thereby exasperating any recession. | |
| The Bank of Japan has already warned that deflation will be a risk until 2011, and has cut interest rates to just above zero. | |
| "Weakness in the overall economy will persist in January-March, and the degree of worsening depends much on how exports turn out," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities. | |
| "It is already a consensus view that core consumer inflation will turn negative soon, but we must watch if a worsening of the economy pushes Japan into a deflationary spiral even though the Bank of Japan sees no signs of that happening right now." |