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Japan exports slide for 6th month as trade troubles knock demand

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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.

[TOKYO] 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 on Wednesday that exports declined 7.8 per cent in May from a year earlier, down for the sixth straight month. The fall in shipments compared with a 7.7 per cent annual decrease expected by economists in a Reuters poll, and followed a 2.4 per cent 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 US-China 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.

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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 on Thursday, 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.

REUTERS