The government on Friday revised down its assessment of the economy in November, lowering the outlook for the fourth straight month, almost matching the dire trend seen after the 2008 global financial crash.
The economy has “shown weakness recently due to the world economy’s deceleration,” the Cabinet Office stated in a monthly report, pointing out that exports and production remain sluggish while private consumption and corporate investment are slowing. In October, it said the economy was “in a weak tone.”
The report for November revised downward five of the 14 categories covered, including bankruptcies and employment. On Monday , government data showed the economy shrank an annualized real 3.5 percent from July to September, marking the first contraction in three quarters and heaping pressure on the ruling Democratic Party of Japan ahead of next month’s election.
The fourth consecutive downgrading is the longest streak since the collapse of U.S. investment bank Lehman Brothers Holdings Inc. triggered the global financial meltdown, resulting in the Cabinet Office lowering its assessment for five months through February 2009.
The report said that “exports are in a weak tone while industrial production is decreasing” in November — leaving the two key components unchanged from last month. It added that consumption is “showing weakness,” while corporate earnings are “flattening further, mainly among manufacturers” and capital spending “is in a weak tone.”
Slower exports have led to weaker manufacturing, trimming corporate profits and capping business investment, the Cabinet Office reported. Consumption has fallen especially after the government’s subsidy program for eco-friendly vehicle purchases ended in September. The incentive had upped output.
The prolonged world economic slump amid Europe’s long-running sovereign debt saga has continued to weigh on Japanese exports not only to the European Union but also to Asia and the United States, as the crisis has spread beyond the eurozone via trade and financial channels.
Meanwhile, the unemployment rate remained below 5 percent but job availability in September dropped for the first time in more than three years, signaling the economy’s overall slowdown is stopping payrolls from expanding.