* May factory output falls 8.4% m/m, more than forecast -5.6%
* Manufacturers expect output to rebound ahead
* Jobless rate at 3-year high, job availability at 5-year low
* Weak data suggests economy sliding deeper into recession
* Govt sticks to view output is “lowering sharply” (Adds jobless data, analyst quote, detail)
By Tetsushi Kajimoto and Daniel Leussink
TOKYO, June 30 (Reuters) – Japan’s industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis, underscoring the widespread impact of the coronavirus on factory activity and the overall business and consumer outlook.
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 on Tuesday 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.
Cars, production machinery, steel and other broad industries were hit hard by slumping demand at home and abroad due to the pandemic. None of the industries surveyed posted an increase in output.
The output slump followed a 9.8% decline in the previous 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 the global financial crisis in late 2008.
UNEMPLOYMENT, BANKRUPTCIES Japan’s economy shrank an annualised 2.2% in January-March, slipping into recession for the first time in 4-1/2 years, and analysts expect the health crisis to have driven a deeper slump in the current quarter.
The deterioration in economic conditions triggered an increase in the jobless rate and a decrease in the number of available jobs, while stoking fears of creeping bankruptcies and unemployment.
Japan’s seasonally adjusted jobless rate rose to 2.9% in May from 2.6% in April, slightly above the median estimate of 2.8%, separate government data showed. It was the highest rate since May 2017.
The jobs-to-applicants ratio fell to 1.20 in May from 1.32 in April, marking the lowest reading since July 2015, labour ministry data showed. It means six jobs were available per five job-seekers.
While Japan’s jobless rate remains well below the rates seen in other advanced countries, some analysts expect employment conditions to worsen further in the coming months.
Indeed, the number of employees posted its biggest year-on-year drop in May since November 2009, falling by 730,000 workers, the government data showed.
Among those categorised as employed, many also remain furloughed, accounting for 6.3% of all employed people. This is the second highest number on record following April’s record high.
Economists say Japan’s actual unemployment rate would likely be much higher than the official rate, given the high number of furloughed staff and the impact on the figures of discouraged workers who have given up seeking jobs. (Reporting by Tetsushi Kajimoto Editing by Shri Navaratnam and Richard Pullin)
LINK ORIGINAL: Reuters