Japan’s exports tumble as US demand slumps, capex outlook weakens

19-Aug-2020 Intellasia | Reuters | 8:43 AM Print This Post

Japan’s exports extended their double-digit slump into a fifth straight month in July as the coronavirus pandemic took a heavy toll on shipments to the United States, dashing hopes for a trade-led recovery from the deep recession.

Core machinery orders, a leading indicator of business spending, also fell, suggesting the economy cannot count on domestic demand either as business investment weakened.

The batch of weak data underscored the challenges for policymakers as they look to prop up economic activity after lockdowns were lifted in May, while containing a second round of infections.

Total exports fell 19.2 percent in July from a year earlier, compared with economists’ median forecast for a 21.0 percent decrease, government data showed on Wednesday. It followed a 26.2 percent drop in the previous month.

By region, shipments to the United StatesJapan’s key marketdeclined 19.5 percent in the year to July.

Exports to China, Japan’s largest trading partner, rose 8.2 percent in the year to July, while those to the rest of Asia were down 8.2%, the data showed.

Separate data showed core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 7.6 percent in June, confounding market estimates of a 2.0 percent gain.

“Machinery orders are declining,” the government said, revising down its assessment from the previous month when it said they were on a “weak note.”

Manufacturers surveyed by the government expect core orders to fall 1.9 percent in the current quarter after dropping 12.9 percent in April-June, the data showed.

Japan’s economy suffered a record annualised contraction in April-June as the pandemic crushed demand for cars and other exports and kept consumers at home.

Analysts expect any rebound in the current quarter to be modest as a resurgence of infections will likely put a lid on demand both at home and abroad.



Category: Japan

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