Japanese exports experienced a significant rise in May, driven by increased shipments of cars to the U.S. and chip-making machinery to China. The weak yen contributed to the competitiveness of Japanese goods.
According to the Ministry of Finance (MOF), exports in May increased by 13.5% year-on-year in value terms, surpassing analysts' expectations of a 13.0% rise and April's 8.3% gain. Imports grew by 9.5%, slightly below the anticipated 10.4% increase but higher than the 8.3% growth seen in April.
This resulted in a trade deficit of 1.22 trillion yen, which was better than the average analyst estimate of a 1.31 trillion yen deficit.
However, export volumes faced challenges, with a 0.9% year-on-year decline in May, indicating slowing global demand. This weakening demand might hinder policymakers' hopes that exports could compensate for sluggish domestic consumption.
The trade data coincided with the Reuters Tankan survey, which showed a decline in confidence among large manufacturers in June, highlighting the uneven nature of economic recovery.
By destination, exports to China increased by 17.8% year-on-year in May, driven by the demand for chip-making machinery. Shipments to the U.S., Japan's key market and ally, rose by 23.9% due to car exports, while exports to the European Union fell by 10.1%.
The trade data came after the Bank of Japan's decision to reduce its substantial bond purchases, with a detailed plan to be unveiled next month, marking a step towards winding back more than a decade of its stimulus program. However, the fragile state of the economy raises uncertainty about future interest rate hikes.
Paraphrasing text from "Reuters" all rights reserved by the original author.
