Industrial output in Japan dropped just over 8% in November compared with the previous month, the biggest fall on record, government figures show.
At the same time, unemployment rose to nearly 4% of the population.
More than 2.5m people were out of work in Japan in November, a rise of 100,000 compared with the year before. Those on temporary contracts are worst affected.
Factories were closed and jobs cut as demand for manufactured goods slumped amid the global financial downturn.
Production at major Japanese manufacturers fell by 3.1% in October.
November's 8.1% drop was the largest since records of such output statistics began.
Dismal data
The new numbers released by Japan's Ministry of Economy, Trade and Industry, suggest industrial output will continue to decline, perhaps by about 8% in December.
The biggest falls came in production of autos, machinery and electronics and followed announcements of large cutbacks by companies including Toyota and Sony.
"Overall, production is rapidly falling," the ministry said.
The BBC's Duncan Bartlett in Tokyo says Japan's factories are usually busy and efficient but at the moment many are sitting idle because there are no customers for their goods.
In the car industry, many companies have decided to stop building new vehicles until they have sold the ones they have already made.
Separately, the Ministry of Health, Labour and Welfare said 2.56 million people were unemployed in Japan in November, an increase of 100,000 from a year earlier.
Those hardest hit are people on temporary or limited contracts - job losses in this group doubled in a month.
Consumer prices rose 1% from a year earlier, driven by higher costs of basic necessities such as food, fuel and electricity.
'No growth'
The Japanese government has already predicted that the economy will not grow in 2009.
Business confidence has plummeted in recent months.
Interest rates are pegged at just 0.1%, lower than US rates. The government has announced several economic stimulus measures.
Japan is the world's second-largest economy, and Asia's largest, so has been directly hit by the slump in demand caused by spreading global recession.
Economists say that the continuing bad news suggests that Japan's recession is getting worse, our correspondent says, despite the attempts by the government and the Bank of Japan to help by increasing public spending and cutting interest rates.
