Japan trade gap widens as imports surge, capex solid for now
TOKYO — Japan’s imports jumped to a record
amount in July, boosted by global fuel inflation and a weak
yen, outweighing exports and deepening the trade deficit, in a
sign of a further worsening in the terms of trade for the
The trade data came on the heels of Reuters Tankan, which
showed improvement in Japan’s business sentiment in August,
while a key gauge of corporate capital spending rebounded in
June from the previous month’s decline.
While the mixed batch of data provides some evidence of
resilience, policymakers are likely to maintain calls for more
stimulus as the world’s third-largest economy struggles to shake
off the hit from the pandemic and as the global outlook dims.
“Exports are likely to slow down ahead due to global
tightening of monetary policy, which could sap corporate
appetite for investment,” said Takeshi Minami, chief economist
at Norinchukin Research Institute.
“Japan’s export-led economy will be losing momentum towards
later this year and early next amid fears of global downturn.”
Ministry of Finance data showed on Wednesday exports grew
19.0% in July from a year earlier, posting 17 straight months of
gains led by U.S.-bound shipments of cars and China-bound
chip-related shipments, beating expectations for a 18.2% gain.
Imports rose 47.2% in July year-on-year to a record 10.2
trillion yen ($76.06 billion), driven by costs of crude oil,
coal and liquid natural gas. That beat expectations for a 45.7%
rise and overwhelmed exports, bringing the trade deficit to
1.4368 trillion yen in July.
The yen’s 23.1% fall from a year earlier added to higher
import costs, the data showed.
CAPEX RETURNS BUT RISKS AHEAD
Separate data showed Japan’s new machinery orders, a key
gauge of capital spending, rose 0.9% in June from the previous
month, reversing the previous month’s decline but below the 1.3%
gain expected by economists.
In April-June, core machinery orders grew 8.1% from the
previous quarter, posting the fastest growth since the final
quarter of 2020. Firms are expecting a 1.8% decline in
July-September core orders, pulling back from the solid growth
seen in the second quarter, a government official told
However, there are downside risks such as China’s economic
slowdown and a COVID-19 resurgence, the official added.
Reflecting corporate resilience, the Reuters Tankan
sentiment index for manufacturers rose 4 points to 13 in August
and is seen up further to 15 over next three months.
The service-sector index rose to 19 from 14 in July and was
seen steady in November helped in part by the lifting of
coronavirus curbs among industries such as tourism and eateries.
($1 = 134.1000 yen)
(Reporting by Tetsushi Kajimoto; Editing by Sam Holmes)