Japan exports up to 41-year high

Photo: EPA

Japan exports posted robust growth in May, reaching fastest pace since 1980, Reuters repored. The rise was largely due to increased demand for machinery from foreign buyers. That spurred capital spendings and offset weaker domestic demand as vaccination against Covid-19 is slow in Japan but gained pace in other industrial countries.

The surge in exports largely reflected a rebound in shipments from last year's pandemic-driven downturn, but was a welcome sign as the economy struggles to recover from the first quarter's slowdown amid an extended coronavirus state of emergency.

The optimistic data will likely brighten the view that the central bank will stick with its ultra-easy policy at its 17-18 June policy meeting, although it may extend pandemic-relief programmes to back the fragile economic recovery. The government recently extended coronavirus emergency curbs in Tokyo and other major areas.

Ministry of Finance data showed exports grew 49.6% year-on-year in May, versus a 51.3% increase expected by economists, led by US-bound car shipments. The jump followed a 38% rise in April and marked the sharpest monthly increase since April 1980, when shipments surged 51.4%.

May's rise largely reflected the slump effect of a 28.3% fall in May of 2020. By region, exports to China, which is Japan's largest trading partner, grew 23.6%, led by chip production equipment, hybrid cars and scrap copper. Exports to US, another key market for Japanese goods, increased by 87.9% in May, a record for year-on-year growth according to comparable data going back to January 1980, driven by cars and auto parts. Imports rose 27.9% year-on-year in May versus a median estimate for a 26.6% gain. Separate data by the Cabinet Office showed core machinery orders, which serve as a leading indicator of capital expenditure in the coming six to nine months, rose 0.6% in April from the previous month, below an expected 2.7% gain. A government official said solid overseas demand for chip manufacturing equipment helped support external orders, which jumped 46.2% in April, rebounding from a 53.9% fall in March.

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