Japan's exports slow, machine orders ease in economic recovery By Reuters
Written by Makiko Yamazaki and Satoshi Sugiyama
TOKYO (Reuters) – Japan's export growth slowed sharply in August as exports to the U.S. fell for the first time in three years, and machinery orders fell sharply in July in a worrying sign of an economy struggling to stabilize.
Weak foreign demand undermines Japan's intention to drive sustainable economic growth, analysts say, especially given the growing risk of a US recession and further weakness in the Chinese economy, two of its biggest trading partners.
“Japan's exports will suffer as the global economy fails to improve, as economic growth in the US and China appears to be slowing next year,” said Takeshi Minami, an economist at the Norinchukin Research Institute.
He said the rise of the weak yen to exports has ended as the Japanese currency rose sharply again in August.
Total exports rose 5.6% year-on-year in August, for the ninth month in a row, data showed on Wednesday, below the average market forecast for a 10% rise and following a 10.3% rise in July.
Exports to the United States fell 0.7%, the first monthly decline in nearly three years, as auto sales fell 14.2%.
Those to China, Japan's biggest trading partner, rose 5.2% in August from a year ago.
The overall picture in terms of volume provided a sombre reading, with shipments down 2.7% last month from the same period last year, the seventh consecutive month of decline.
Imports rose 2.3% in August from a year earlier, compared to the 13.4% increase expected by economists.
As a result, the trade balance stands at a deficit of 695.3 trillion yen ($4.90 billion), compared to a forecast deficit of 1.38 trillion yen.
Separate data from the Cabinet Office showed that machinery orders fell unexpectedly by 0.1% in July from the previous month, beating the 0.5% rise expected by economists in a Reuters poll.
Compared to a year ago, primary orders, the most volatile data series taken as an indicator of spending over the next six to nine months, rose 8.7%, beating the 4.2% increase seen by economists.
The government has stuck to its assessment of the mission orders that the recovery has stalled.
A surge in personal consumption helped Japan's economy pick up sharply in the second quarter from a slump earlier in the year, but growth was revised downward last week.
Reflecting the economic slowdown, a monthly Reuters survey showed last week that business confidence among Japan's largest manufacturers fell to a seven-month low in September, with executives in various sectors citing soft Chinese demand as a concern.
The Bank of Japan is expected to keep monetary policy tight at a two-day meeting ending Friday, but signaled that interest rate hikes are coming and highlight the progress the economy is making in keeping inflation around its 2% target.
Norinchukin's Minami said economists generally expect spending to support Japan's growth but “with little hope of rising exports, recovery momentum will be weak.”
