Japan’s exports fell in May for the first time in 15 months on weak demand from the U.S. and Asia, adding to challenges for Prime Minister Shinzo Abe as he tries to steer the economy through a forecast contraction this quarter.
Outbound shipments decreased 2.7 percent from a year earlier, the finance ministry said in Tokyo today, steeper than a median forecast for a 1.3 percent decline in a Bloomberg News survey of 29 economists. Imports (JNTBIMPY) dropped 3.6 percent, with the trade deficit narrowing to 909 billion yen ($8.9 billion).
Slowing demand from the U.S. and China - Japan’s two biggest export destinations -- threatens to weigh on shipments, which are losing impetus as the yen’s slide against the dollar stalls. The shuttering of nuclear power plants after the 2011 Fukushima disaster has pushed up energy import costs, contributing to a record run of deficits -- now at 23 months.
“Emerging economies, especially China, are slowing, and this is a big factor in declining exports,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “Exports will return to a gradual recovery, however they will not be strong enough to be an engine for Japan’s growth.”
Japan’s Topix index rose 0.4 percent as of 11:30 a.m. in Tokyo as investors awaited a Federal Reserve decision on monetary policy. The yen was little changed against the dollar.
Exports to the U.S. fell 2.8 percent, the first drop in 17 months, while shipments to Asia declined 3.4 percent. Shipments to China were up 0.4 percent, the smallest rise in more than a year while those to India were down 1.6 percent.
The value of motor vehicle shipments dropped 4.3 percent, the first decline in 14 months, and export volumes declined 3.4 percent, the largest drop since June 2013. Overseas sales of ships fell 32.5 percent and shipments of mineral fuels dropped 45.7 percent.
Fuel exports fell because some refineries are in scheduled maintenance, according to Osamu Fujisawa, a Tokyo-based independent oil economist who has worked for Royal Dutch Shell Plc and Saudi Arabian Oil Co.
Crude oil imports declined 15.1 percent. Japanese oil refiners including JX Holdings Inc. (5020), the country’s largest, cut capacity by a combined 10 percent at the end of March to meet government rules meant to compel them to upgrade facilities or reduce output.
Fuel imports fell after a surge in demand before the sales tax and an energy tax were raised in April, Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo, wrote in an e-mailed note. Demand for energy is not falling, he said, and imports will probably rise as inventories built up before the tax rises are depleted.
China’s economy is forecast to grow 7.4 percent this quarter, matching the slowest expansion in more than five years, a separate Bloomberg News survey shows.
As part of its 18 percent slide last year, the yen weakened past 100 against the dollar in May 2013 for the first time in more than four years. The Japanese currency has strengthened about 3 percent this year.
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