Japanese exports extend gains, machinery orders fall amid fragile recovery

TOKYO, Aug. 18 (Reuters) – Japanese exports marked a fifth consecutive month of double-digit growth in July, driven by auto shipments to the United States, a positive sign for a trade-driven economy, although that a key indicator of capital spending fell for the first time in four months.

The mixed batch of indicators underscored the fragility of the world’s third-largest economy, which grew 1.3% in the April-June quarter on strong exports and a surprise gain in private consumption.

However, prolonged coronavirus restrictions in bars, restaurants and other face-to-face service businesses cloud the outlook, putting pressure on Prime Minister Yoshihide Suga to roll out another big stimulus package.

Finance Ministry data released on Wednesday showed that Japanese exports grew 37.0% year-on-year in July, somewhat slower than a 39.0% increase expected by economists in a Reuters poll, although that the gain was overstated by the contrast to the previous year’s COVID. -induced sag.

It follows a growth of 48.6% the previous month.

“Exports have remained in an uptrend, which will continue over the next few months, although auto production could face supply constraints due to chip shortages,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.

“Although the service sector may be affected by a protracted COVID pandemic, corporate capital spending and production will remain on solid footing,” he said.

Nonetheless, Suga could roll out a stimulus package of around 30 trillion yen ($ 274 billion), which will serve as proof of political will to support the economy at election time, Maruyama added.

By region, exports to China, Japan’s largest trading partner, rose 18.9% in July, driven by chipmaking equipment and plastics, the data showed.

Shipments to the United States, another key market for Japanese products, rose 26.8% in July, driven by exports of cars, parts and engines, according to the report.

Imports rose 28.5% in July, against a median estimate of a 35.1% increase, bringing the trade balance to a surplus of 441 billion yen ($ 4 billion), compared to the median estimate of a surplus of 202.3 billion yen.

Strong external demand has helped support activity at Japanese factories, although a global chip shortage and signs of slowing economic recovery in China are cause for concern.

Separate data from the Cabinet Office showed orders for basic machinery, a highly volatile indicator of capital spending for the next six to nine months, fell 1.5% in June from the previous month, from a 2.8% decline expected by economists in a Reuters poll.

Year-over-year, base orders, which exclude those of ships and electric utilities, jumped 18.6% in June, a third consecutive month of annual gain, prompting the Cabinet Office to maintain its view that machine orders are showing signs of recovery.

($ 1 = 109,5100 yen)

Reporting by Tetsushi Kajimoto and Daniel Leussink; additional reporting by Kantaro Komiya and Kentaro Sugiyama; Editing by Sam Holmes

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