Japan's output drops sharply

THE STEEPEST fall in industrial production in Japan's history and the highest unemployment rate for almost six years yesterday signalled that the Japanese economy has taken a sharp turn for the worse, writes Peter Torday.

Mounting uncertainty over prospects for recovery helped to trigger the latest Tokyo stock market crash and the Prime Minister, Morihiro Hosokawa, yesterday refused to take direct action to support the market despite professing concern over the latest plunge in prices. 'Needless to say, share prices are determined by conditions of supply and demand,' he said.

A 5.1 per cent plunge in industrial production in October increased pressure for government intervention in the markets and an emergency economic stimulus programme.

The steepest one-month fall on record contrasted with a 2.2 per cent rise in the previous month. Official projections estimate that production will be down by 3.1 per cent in the fourth quarter after a rise in November is followed by falling output in December.

The government announced that the unemployment rate rose to 2.7 per cent in October, the highest since February 1988, and the ratio of job vacancies to unemployment benefits claimants fell to the lowest since June 1987.

An official survey showed that many leading companies do not foresee a recovery until the fourth quarter of 1994 and more than two-thirds think they

have bloated workforces.