Japan’s exports rose at the slowest pace in May since a decline in August last year, sapping a recovery in the world’s third-biggest economy.
The value of overseas shipments climbed 2.4 percent from a year earlier, the Ministry of Finance said on Wednesday, below an estimated 3 percent gain. The volume of exports fell for the first time since February, down 3.8 percent.
Sluggish exports could weigh on industrial production as manufacturers try to work off an inventory buildup that helped drive a faster economic expansion last quarter. Slowing growth in China, Japan’s biggest trade partner, is undermining demand, according to Toru Suehiro, an economist at Mizuho Securities Co.
“A pickup in exports has been weaker than expected, reflecting a slow global recovery,” said Atsushi Takeda, an economist at Itochu Corp. “The Bank of Japan will have to keep an eye on the downside risks.”
The yen declined 0.1 percent to 123.42 per dollar at 10:01 a.m. in Tokyo, losing 11.5 percent since the Bank of Japan added to its unprecedented monetary easing last October.
The value of Japan’s exports to China rose 1.1 percent, the smallest increase since a drop in February, while shipment volumes fell 4.5 percent. Export volumes to the U.S. fell 6.7 percent, the biggest drop since March 2013, with shipments of auto parts sliding 15.6 percent.
Overall, imports slid 8.7 percent, leaving a 216 billion yen ($1.7 billion) trade deficit.
“The trade deficit narrowed slightly in May, but should creep higher in the second half of the year as the weaker yen pushes up import costs,” Marcel Thieliant, an economist at Capital Economics, wrote in a note.
The deficit in foreign trade of goods and services was “almost flat,” the Cabinet Office said in its June assessment of Japan’s economy, after last month saying the shortfall was in a “downtrend.”