Japan May exports down for 6th straight month on sluggish Asia demand

20, Jun. 2019

TOKYO, NNA - Japanese exports posted the sixth straight year-on-year decline in May as the downcycle in global semiconductor demand lingers and the U.S.-China trade spat weighs on global growth, trade statistics released Wednesday by the Ministry of Finance showed.

Japan posted the first trade deficit in four months as the drop in exports was larger than the drop in imports.

Key points:

―― Japanese exports fell 7.8 percent from a year earlier in May, hit by lower shipments of chipmaking equipment, auto parts and steel products. It was the sixth consecutive y/y drop after falling 2.4 percent in April. It was the largest y/y decline since January, when exports slumped 8.4 percent.

―― Exports to the United States marked the eighth straight y/y rise on continued solid demand for automobiles, while those to the European Union posted the second straight y/y drop, led by lower shipments of drugs and computer parts. Exports to Asia showed the seventh straight y/y decline, led by chipmaking equipment, non-ferrous metals and auto parts. Those to China dipped for the third month in a row.

―― Imports dipped 1.5% for the first year-on-year decline in three months after rising 6.5 percent in March. The decrease was led by lower purchases of liquefied natural gas, chemical compounds (cosmetics) and coal.

―― The May trade balance came to a deficit of 967.1 billion yen ($8.7 billion), widening from a deficit of 577.4 billion yen a year earlier and following a surplus of 56.8 billion yen in April.

Takeaway:

―― Government policymakers and private-sector economists expect Japanese exports to remain sluggish as the U.S.-China trade dispute continues.

―― BNP Paribas economists said in a research note Wednesday that a pickup in exports by the end of the year appears unlikely. They estimate that real exports slumped 5.2 percent on the month after rising 2.8 percent in April, saying exports were already weak apart from some shipments being halted during the long public holidays in May this year. The April-May average in real exports rebounded only 0.8 percent from a 3.1-percent drop in the January-March quarter, they said.

―― Estimates by Nomura Securities economists showed Japan’s real exports fell 4.0 percent in May from April, and that the April-May average of real exports gained just 0.5 percent from a 2.7 percent drop in the first quarter. This points to weakness in the recovery momentum, Nomura said in a report.