Japan's May factory output down 3.1 percent

Japan's central bank slashed its growth forecast on Thursday as factory output and consumer spending saw their biggest ever falls in the wake of the massive March 11 earthquake and tsunami disaster.Industrial production took a 15.3 percent dive from February to March, the sharpest drop since records began in 1953, after the calamity crippled supply chains and forced companies to shutter plants.

The short term effect of Japanese stimulus following the earthquake and tsunami has now worn off. All Japan has to show for that stimulus is a bigger pile of debt, proving once again the Broken Window Fallacy. In the real world, Japan has a debt-to GDP ratio of 225% and rising. Japan's export machine has stalled. So has Japanese manufacturing in general.

Japan's disaster-hit economy will expand 2.0 percent this year amid a surge in reconstruction spending, but it could be tempered by energy shortages and Europe's debt woes, the IMF said Tuesday.In its latest World Economic Outlook, the International Monetary Fund upgraded its forecast on the world's number-two economy from its earlier 1.7 percent projection.The economy shrank 0.7 percent in 2011 as it was hit by the March 11 quake-tsunami and resulting nuclear crisis, as well as heavy flooding in Thailand that hammered factory output for Japanese firms with plants there.

Japan's factory output took a record tumble in March after a devastating earthquake and tsunami forced the nation's biggest companies to shutter plants and crippled supply chains, data showed Thursday.A 15.3 percent dive in Japan's industrial production month-on-month was the sharpest since records began in 1953, the government said.In other data illustrating the impact of the March 11 disasters on the world's third-biggest economy, household spending suffered its biggest-ever drop as cautious consumers held off on purchases of non-essential goods.

Japan's factory output fell for the first time in 12 months while unemployment remained unchanged at 4.9 per cent, data showed Thursday, underlining the fragile nature of the economic recovery.Asia's biggest economy last year emerged from its worst post-war recession, growing at a modest 0.9 percent in October-December due to rebounding exports, much of them to booming China, and government stimulus measures at home.However renewed deflation is seen as a threat to the recovery exacerbating already subdued consumer demand from Japan's shrinking and greying population.