Tokyo - Japan's industrial output dropped in October because of slow overseas demand for cars and high-tech devices amid the global financial turmoil as consumer prices rose for the 13th-consecutive month, leading Japanese to cut spending, government reports said Friday.

In Japan's key industrial sector, output in October fell a seasonally adjusted 3.1 per cent from the previous month because of a slowdown in orders for export-oriented industries, such as transport equipment, electronic parts and devices, and general machinery, the Ministry of Economy, Trade and Industry said.

The ministry forecast output from manufacturers would decline 6.4 per cent in November, which was the worst projection since it started keeping the statistics in May 1973. It predicted output would fall 2.9 per cent in December.

In October, the index of output at mines and factories stood at 102.3 against a base of 100 for 2005, the ministry said.

The sluggish output was reported as production of passenger cars dropped 7.8 per cent from the previous month after demand slowed in the United States, Europe and the Middle East, officials said.

Meanwhile, Japan's core consumer price index rose 1.9 per cent in October from a year earlier as raw material costs fuelled hikes in food prices, the Ministry of Internal Affairs and Communications said in a preliminary report.

The core index, which excludes fresh food prices, stood at 102.4 against 100 for the base year of 2005.

October's increase slowed from a 2.3-per-cent rise in September and a 2.4-per-cent increase in August.

Because of the high food prices, Japan's households cut spending in October by 3.8 per cent from a year earlier to 291,504 yen.

Spending for food was down 1.5 per cent while it was down 8.2 per cent for utilities.

The average income of salaried households rose 0.4 per cent to 481,746 yen while spending for this segment of the population dropped 6 per cent to 313,544 yen.

Household spending figures are considered a key indicator of individual spending, which accounts for more than half of Japan's gross domestic product.

On the employment front, the government said the jobless rate fell 0.3 points in seasonally adjusted terms to 3.7 per cent in October from the month before as more unemployed people gave up looking for work.

There were 80 jobs available for every 100 job seekers, which was the worst ratio since April 2004, when there were 78 jobs available.

The number of people who left the labour market, or people who stopped seeking jobs, rose 560,000 from a year before, the Ministry of Internal Affairs and Communications said in a preliminary report.

The number of job offers fell 2.1 per cent from September and the number of offers for newly created jobs dropped 18.1 per cent while the number of job seekers grew 2 per cent, the labour ministry said.