Japan’s exports slow sharply, machinery orders fall
Japan’s export growth slowed sharply in August as shipments to the United States dropped for the first time in three years, while machinery orders unexpectedly shrank in July in a worrying sign for an economy struggling to mount a solid recovery.
The frail external demand undermines Japan’s quest to drive sustainable economic growth, said analysts, especially given a growing risk of a slowdown in the US and further weakness in China’s economy, two major trading partners.
“Japan’s exports are bound to struggle as the global economy is failing to pick up momentum, with growth in both the U.S. and China economies seen slowing down next year,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
He said a boost from the weak yen to exports has faded as the Japanese currency rebounded sharply in August.
Total exports rose 5.6 per cent year-on-year in August, up for a ninth straight month, data showed yesterday, well below a median market forecast for a 10 per cent increase and following a 10.3 per cent rise in July.
Exports to the US dipped 0.7 per cent, the first monthly decline in nearly three years, as auto sales slumped 14.2 per cent.
Those to China, Japan’s biggest trading partner, rose 5.2 per cent
in August from a year earlier.
The overall picture in terms of volume also provided for sombre reading, with shipments down 2.7 per cent last month from the same period a year ago, the seventh consecutive month of declines.
The value of imports grew 2.3 per cent in August from a year earlier, versus a 13.4 per cent increase expected by economists.
As a result, the trade balance stood at a deficit of 695.3 billion yen, compared with the forecast of a deficit of 1.38 trillion yen.
Separate data from the Cabinet Office showed core machinery orders unexpectedly declined 0.1 per cent in July from the previous month, confounding a 0.5 per cent rise expected by economists in a Reuters poll.
Compared with a year earlier,
core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 8.7 per cent, blowing past a 4.2 per cent increase seen by economists.
The Bank of Japan is expected to keep monetary policy steady at a two-day meeting that ends today, but signal that further interest rate hikes are coming.