TOKYO (AP) - Japan's factory production and consumer spending both fell the most on record in March as the earthquake, tsunami and nuclear disasters sent the country's halting economic recovery into reverse.
The government said Thursday that industrial production plunged 15.3 percent from February after the March 11 earthquake and tsunami devastated Japan's industrial northeast, crippled a nuclear power station that continues to leak radiation and caused widespread power shortages.
Factory production had been expected to fall sharply due to the disasters, but the drop was worse than the forecast of an 11.4 percent decline in a Kyodo News agency survey of analysts.
The disasters, which killed about 25,000 people, destroyed many factories, causing severe parts and component for manufacturers across the Japanese economy but especially for automakers.
Manufacturers including Toyota Motor Corp. and Sony Corp. were forced to suspend production due to the supply crunch and power outages.
Transport equipment recorded the sharpest production drop - a 46.4 percent decline - underscoring the northeast region's integral role in supplying Japan's auto industry with auto parts, graphics chips and other high-end components.
The Japan Automobile Manufacturers Association announced Thursday that the country's vehicle production fell 57.3 percent in March from a year earlier to 404,039 vehicles.
The Ministry of Economy, Trade and Industry said the country's industrial production would recover "gradually" from damage caused by the disasters, forecasting a 3.9 percent improvement in April and a 2.7 percent uptick in May.
But Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, said the government's forecast was probably overly optimistic.
Even if it held true, it would be months before production reached its already depressed pre-disaster level, he said.
"This is a frustrating outlook," he said.
Ministry officials said the March decline in the country's index of output at factories and mines was the greatest since record keeping began in 1953. The previous largest decline was in February 2009, when the global financial crisis that began a few months earlier dragged production down 8.6 percent.
Prime Minister Naoto Kan has said he hopes disaster-recovery spending would help lift Japan out of its 20-year economic decline. China last year overtook Japan to become the world's second-biggest economy.
The government proposed a special $50 billion (4 trillion yen) budget last week to help finance rebuilding efforts, which officials said would likely be only the first installment of reconstruction funding.
Japan's central bank, meanwhile, said Thursday it was keeping its key interest rate unchanged at zero to 0.1 percent in a bid to support economic growth after the disasters.
The Bank of Japan has pumped billions of dollars into the financial system to stabilize the economy since the quake.
In another report Thursday, the government's statistics bureau announced that consumer spending had also seen a record decline in March, falling 8.5 percent from a year earlier.
The previous sharpest decline in the numbers that have been tracked since 1963 was a 7.2 percent dip in February 1974, soon after the 1970s oil shock helped trigger a worldwide stock market crash.
Goldman Sachs Global Economics analyst Norihiko Baba said in a report that a decline of 4 percent to 5 percent had been expected, since spending in March 2010 was especially robust due to tax breaks and discounts available at the time on energy-saving cars and appliances.
The much larger drop implied that the disasters were having a "strong impact" on spending, Baba said.
Kan has urged Japanese consumers to open their wallets as a way to help spur the economy, stressing that the upcoming Golden Week holidays will be a particularly good opportunity to spend.
But Schulz said consumers are unlikely to be in a spending mood amid the out-of-service elevators, dimmed lights and other power-saving reminders of the nuclear energy crisis set off by the disasters.
"Households in Japan after this shock and seeing that the crisis is ongoing will simply not go out and buy a new car or anything this year," he said.
Separately, the government said the nation's unemployment rate was unchanged in March from February at 4.6 percent, but the survey excluded the three prefectures hardest hit by the disasters.
The seasonally adjusted figure was better than Kyodo News agency's average market forecast of 4.8 percent. It was the ninth consecutive month of steady improvements in the nation's employment picture.
Schulz said the surprisingly upbeat jobs numbers were probably linked to employers' need to keep workers on their payrolls to help restore damaged supply lines.
But he predicted a sharp downturn in those figures, as the drop-off in consumer spending translates into fewer jobs at hotels, restaurants and shops in Japan's massive service sector.
The government also reported that consumer prices declined for the 25th straight month. The key consumer price index fell 0.1 percent as deflation continued to weigh on the economy.
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