Japanese industrial production fell sharply in October and the jobless rate rose, reinforcing concern that a slowdown in global demand was taking a toll on the country's export-reliant economy. Industrial output fell 1.6 percent from the previous month, government data showed on Tuesday, undershooting the market's consensus forecast of a 0.1 percent gain.
Although the government maintained its view that output was flat and cabinet ministers said conditions continued to improve, economists said the string of weak data in the last few months may be more than a soft patch.
The figures prompted selling in Tokyo shares and the benchmark Nikkei average was down nearly 1 percent in afternoon trade.
"It's a sign that the economy's adjustment phase is stronger than expected," said Takashi Yamanaka, economist at UFJ Bank.
Details from the Ministry of Economy, Trade and Industry (METI) showed the decline was led by a fall in demand for electronic parts such as those used in high-tech televisions and mobile phones.
Overall inventories fell 0.7 percent month-on-month, but inventories of such parts rose 3.1 percent from September and a more dramatic 36.4 percent year-on-year.
"It does suggest that inventory adjustment is still a problem, particularly in the electronics sector," said Peter Morgan, economist at HSBC.
The ministry's data showed manufacturers' output - the core component of overall production - was expected to rise 3.7 percent in November before falling 2.2 percent in December. A statistics official at METI played down the October figures.
"The outlook for November is positive, so I don't think one can say that conditions have worsened just because of the fall in October," he said. The output figures followed a private-sector survey of manufacturers that showed production expanded at its slowest rate in 16 months in November as orders from overseas, particularly China, wilted for the first time since mid-2003.
The Reuters/Nomura/JMMA Purchasing Managers Index (PMI), which gives an early snapshot of manufacturing activity, slipped to a seasonally adjusted 51.3.
Although that represents an 18th straight month of readings above 50, which suggests growth in the sector, it was down from 52.9 in October and the lowest number since July 2003.
Key to the weak PMI reading was dampening demand for exports, especially electronics. Exports have been one of the principal drivers of the recent economic upturn in Japan.
The new export orders index slipped to 49.5, its first time below 50 since May 2003. It was 50.8 in October. The overall new orders index tumbled to 48.6, the lowest number in 18 months, from 53.3 a month earlier. The jobless rate inched back up to 4.7 percent in October from 4.6 percent a month earlier, although jobs on offer per applicant rose to the highest level since February 1993.
The jobs-to-applicants ratio for October was 0.88, meaning 88 jobs were available for every 100 applicants.