Friday January 30, 12:39 PM
World economic crisis savages earnings, jobs
TOKYO (AFP) - Massive losses and cutbacks struck top Japanese companies on Friday, with electronics giant NEC (Berlin: NEC1.BE - news) alone shedding 20,000 jobs, as more dire earnings and unemployment data poured in from Europe.
Japan announced a triple slump in key economic data, with industrial output, consumer spending and employment all sharply down, and said there was no end in sight to the bad news.
December's 9.6 percent drop in Japanese industrial output from the previous month was the steepest such decline on record.
"The problem is very serious," Economics Minister Kaoru Yosano said. "As to when the economy will bottom out, it is impossible to predict at this time as the problem is not only domestic but global."
This echoed gloomy reports on the health of the economy in the United States, where President Barack Obama took aim at what he called the "shameful" bonuses given to bankers during the financial crisis.
In Europe, official EU data released on Friday showed unemployment in the countries using the euro rose in December to the highest level in more than two years, hitting 8.0 percent amid growing layoffs.
Frustrations over the social impact of the crisis spilled over into protests in Britain meanwhile, a day after mass strikes and demonstrations in France.
Hundreds of workers at oil refineries across Britain went on strike in protest at the use of foreign labour in engineering and building projects.
Bailed-out Franco-Belgian bank Dexia (Brussels: DEXB.BR - news) announced 900 job cuts after an estimated three billion euro net loss and Banco Popular, the third-biggest Spanish bank, said its 2008 net profit fell 16.8 percent.
These were dwarfed by the news from Japanese companies, which announced a raft of gloomy earnings data on Friday that underlined the severity of the crisis facing the world's second biggest economy.
Electronics giant NEC said it was slashing 20,000 jobs worldwide and forecast a loss of 3.2 billion dollars. Hitachi (Xetra: HIA1.DE - news) said it stood to lose 7.8 billion dollars for the current fiscal year and would cut up to 7,000 jobs.
Computer maker Fujitsu Ltd (FUJ.IL - news) ., Honda Motor (Paris: JP3854600008 - news) and the country's second-largest bank, Mizuho Financial Group, all announced big losses.
The Japanese data came a day after the United States said new home sales had plunged almost 15 percent in December to the lowest monthly level on record, while the number of people seeking unemployment benefits hit a record high.
The Japanese stock market tumbled as a result, hurting European equities.
Tokyo share prices dived to close at 3.12 percent.
"Asian equity markets sold off as a result of a steep fall in Japanese factory production in December, with the car and electronics industry sectors being hit hard by reduced demand from slowing economies in Europe and in the US, and by a strong yen," said Barclays Capital Research analyst Marek Sasura.
In morning European trade, London overcame early losses to trade up 0.51 percent, Frankfurt shed 0.22 percent and Paris lost 0.19 percent.
With east and west alike battered by the economic slowdown, China's premier Premier Wen Jiabao and EU leaders sought to boost cooperation to tackle the crisis.
Decades of rampant growth in China have shown signs of slowing over recent months as its export-dependent economy has suffered from a decline in activity elsewhere.
"We have spoken about the economic and financial crisis that we must confront together," EU External Relations Commissioner Benita Ferrero-Waldner said after a first round of talks in Brussels.
The EU also estimated that inflation in the eurozone slumped in January to a near 10-year low of 1.1 percent, well below the European Central Bank's comfort zone of close to but less than 2.0 percent.
Growing unemployment in Europe looked set to push down inflation and wages further, according to analysts including Jonathan Loynes at consultants Capital Economics.
"With surveys showing a sharp decline in hiring intentions, further sharp increases in unemployment lie ahead," he said.
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