Japan’s exports fell for a sixth straight month in May as China-bound shipments of semiconductor manufacturing equipment and car parts weakened, underlining persistent pressure on the trade-reliant economy from slowing external demand.
Sluggish exports have been a source of concern among Japanese policymakers, especially as a bruising US-China tariff war has upended supply chains and hit global growth, trade and investment.
Ministry of Finance (MoF) data showed yesterday that exports declined 7.8% in May from a year earlier, down for the sixth straight month.
The fall in shipments compared with a 7.7% annual decrease expected by economists in a Reuters poll, and followed a 2.4% year-on-year fall in April.
The trade data comes on the heels of a Reuters poll of Japanese companies showing the economy is likely to stop expanding this year and into next as the Sino-US trade war and a planned sales tax hike are expected to crimp activity.
Earlier this month, Group of 20 finance leaders warned that intensifying trade and geopolitical tensions raised risks to global growth, but they stopped short of calling for a resolution of the deepening US-China trade conflict.
The slowdown in exports in May was also likely caused by suspension of factory activity due to the 10-day break as the Golden Week holiday was extended this year to mark the enthronement of a new emperor, analysts say.
Overall, however, weak global demand poses risks for the world’s third-biggest economy, and faltering earnings at Japan Inc suggests little respite in the months ahead especially if domestic demand fails to offset frail exports.
At the two-day meeting that ends today, the Bank of Japan is expected to keep monetary policy steady but signal its readiness to ramp up stimulus if growing overseas risks threaten the economy’s modest expansion. Weak economic growth could prompt Prime Minister Shinzo Abe to postpone a planned sales tax hike to 10% for the third time. The previous sales tax hike to 8%, from 5%, in 2014 hit consumption and was blamed for a slump in the Japanese economy.
By region, US-bound exports rose 3.3% in the year to May, driven by a 9.9% rise in car shipments, while imports fell 1.6%, led by crude oil.
It marked the eight straight month of exports growth to the US following a 9.6% increase in April.
As a result, Japan’s trade surplus with the United States grew 14.8% in May from a year earlier to ¥395bn ($3.64bn), rising for three months in a row – a worrying signal for bilateral trade talks as Tokyo is under pressure from Washington to fix what it says is an unfair trade imbalance.
Exports to China – Japan’s biggest trading partner – fell 9.7% in the year to May, posting a third straight month of declines, the trade data showed. Shipments to Asia, which accounts for more than half of Japan’s overall exports, fell 12.1% year-on-year in May.
Japan’s overall imports fell 1.5% in the year to May, compared with the median estimate for a 0.2% annual increase.
The trade balance came to a deficit of ¥967.1bn, versus the median estimate for a ¥979.2bn shortfall and marked the fourth straight month in the red.
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