Tokyo - Japan's industrial output suffered a record fall in November, as unemployment numbers rose and slowing inflation rates raised deflation fears, officials said Friday.

The Ministry for Economy, Trade and Industry said production dropped by 8.1 per cent compared to the previous month, the largest drop on record since 1953, as foreign demand for cars and electronic goods plunged, dealing a heavy blow to Japan's export-oriented industry.

Industry output was sinking "rapidly," the ministry said, predicting another 8-per-cent drop for December, and a 2.1-per-cent drop for January.

However, stocks gained ground Friday despite grim news. Investors took the news calmly, traders said, as they were already expecting less-than-encouraging data.

The benchmark Nikkei 225 Stock Average climbed 140.02 points, or 1.63 per cent, to close at 8,739.52.

As Japan drifts deeper into recession, large companies have laid off thousands of temporary workers, thereby swelling the unemployed ranks to 3.9 per cent in November, a 0.2-per-cent rise compared with the previous month.

One in three jobs in Japan is temporary, making job security a key issue for the Japanese public.

In November, 2.56 million people were officially unemployed, 100,000 more than in the same month last year. For every 100 jobseekers there were only 76 jobs on offer.

Private consumption dropped by 0.5 per cent, the ninth monthly drop in a row, but was lower than expected.

Annual consumer inflation slowed to 1.0 per cent in November from 1.9 per cent the previous month, raising fears of a return to deflation.

Japan's government recently passed a record 88.5-trillion-yen (980-billion-dollar) budget for the fiscal year starting April 1, 2009 in an attempt to kick-start the stagnant economy, but will have to postpone plans to fix public finances.

The budget is to be presented to parliament around January 19, even before, on January 5, a second additional budget is to be approved.

Prime Minister Taro Aso hopes these attempts to cushion the effects of the recession will also boost his plummeting popularity figures, which dropped below 20 per cent in recent polls. (dpa)