* Nov industrial output -2.6 pct m/m vs forecast -0.8 pct
* Companies see Dec output up 4.8 pct, Jan output up 3.4 pct
* Core CPI down 0.2 pct yr/yr in November
* November unemployment steady at 4.5 pct
By Kaori Kaneko and Stanley White
TOKYO, Dec 28 Japan's factories cut output
more than expected in November because of supply disruptions
caused by flooding in Thailand and may at best recoup lost
production in the coming months as global slowdown and Europe's
debt crisis sap overseas demand.
Industrial output fell 2.6 percent last month, much more
than a median market forecast of a 0.8 percent decline, wiping
out October's 2.2 percent gain, government data showed on
Many Japanese electronics and carmakers have production
facilities in Thailand or rely on parts made in the country and
output of information and communication equipment slumped by
nearly a quarter while production of cars and other
transportation equipment fell 9.5 percent.
"The flooding is subsiding and both industries expect sharp
production expansions in the next two months," said Takuji
Okubo, chief economist at Societe Generale in Tokyo.
Manufacturers surveyed by the Ministry of Economy, Trade and
Industry, expect production to rebound 4.8 percent in December,
which the ministry estimates would keep October-December output
virtually unchanged from the third quarter.
Japanese companies predicted further 3.4 percent rise in
January, but economists said companies tended to overshoot their
forecasts and warned that the economy will struggle to regain
momentum after weak final quarter of this year.
"It is likely that external demand will continue to shrink
in the first quarter of 2012, judging from our global economic
outlook," Okubo said. "Industrial production seems set to expand
for the next two months, but whether it can continue to grow
beyond the short term is uncertain."
The Bank of Japan last week struck a pessimistic note,
acknowledging that the world's third-largest economy will
stagnate at least until spring next year, but stood pat on
policy to save its limited ammunition.
Posing a further challenge to the central bank, core
consumer prices fell 0.2 percent in a year to November, separate
data showed, confirming deflation that has lasted for much of
the past 15 years is persisting.
Worries about the health of the Japanese and world economies
weighed on domestic consumption, with household spending falling
3.2 percent in November from a year earlier and retail sales
down 2.3 percent. Both results were much weaker than forecasts.
Japan's economy probably slowed sharply this quarter, after
robust 1.4 percent growth in the third quarter driven by
companies' efforts to restore output and damaged supply chains.
But many analysts count on reconstruction to help the
economy make it through a soft patch given the government has
allocated 18 trillion yen ($231 billion)in related spending this
fiscal year and the next.