February 27, 2009

Japan’s economy, production, show strain

Manufacturing in Japan declined sharply in January, falling a record 10 percent from December and 30.8 percent from a year ago, the government said.

The Ministry of Economic Trade and Industry also said it expected production to decline 8.3 percent in February before regaining some strength with a 2.8 percent climb in March.

Job offers fell 18 percent in the month, further evidence the recession has deepened sharply in Japan, the world's second largest economy, the Financial Times reported Friday.

We have a very severe downturn and that is feeding into the banking system to create Japan's own version of some of the stresses we've got in the rest of the world, said John Richards at the Royal Bank of Scotland in Tokyo.

As Japanese exports fell a record 45.7 percent in January, Richards said there were indications the country was laying the ground work for a deflationary environment.

On the inflation front, the Consumer Price Index in January came in flat at 0.0 percent with core inflation, excluding food and energy costs, registering minus 0.2 percent.