Japan exports drop as global stimulus impact wearing off
Exports to the US have lagged improvements in shipments to Asia as the world's largest economy struggles to pick up steam, while the yen's rise against the US dollar also played a part.
But exports to the fast-growing Chinese economy also fell faster as a surge in state spending and loan growth failed to mask tepid domestic demand there.
Some overseas stimulus programmes have already expired, and economists warn that as fiscal support for the global economy runs its course, Japan's exports could slow as weak labour markets in the US and Europe mean consumers will not be able to pick up the slack.
In a sign demand within Japan is not strong either, prices for business-to-business services marked a record annual fall last month for the third consecutive month, as deflation deepens.
"Falls in Japanese exports have been moderating in recent months on companies' restocking efforts and government stimulus worldwide. But the July trade data indicates that the recovery momentum is losing steam," said Seiji Shiraishi, chief economist at HSBC Securities.
"It is questionable whether exports will continue to recover once the stimulus effect runs out because global final demand may not turn up fully."
On a seasonally adjusted basis, exports fell 1.3 per cent last month from June, data showed on yesterday, the first drop in two months.
Before adjustments, the value of Japan's exports rose 5.3 per cent from June, slower than a 14.4 per cent rise in June.
Compared with a year earlier, Japan's exports fell 36.5 per cent last month. That was slightly less than the median forecast for a 38.6 per cent fall, but faster than the 35.7 per cent annual decline in June.
Exports fell at a faster annual rate because of slower shipments of cars to the Middle East, Russia and the US. Exports of steel and semiconductors to Asia also posted faster annual declines.
Japan logged a trade surplus of 380.2 billion yen (HK$31.27 billion) last month, just short of the median estimate for a 385 billion yen surplus.
Exports of steel to China were weak, said Junko Nishioka, the chief Japan strategist at RBS Securities, raising worries about a China-driven recovery scenario.
