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By Tetsushi Kajimoto and Kantaro Komiya
TOKYO (Reuters) – Japan’s imports hit a record high in July, boosted by global fuel inflation and a weak yen, outpacing exports and widening the industry’s deficit, a sign of a further deterioration in industry terms for exporting countries.
Trade data came on the heels of Reuters Tankan, which showed an improvement in Japan’s trading climate in August, while a key gauge of corporate capital spending rebounded in June after last month’s slump.
While the combined batch of knowledge provides evidence of resilience, policymakers will most likely continue to call for more stimulus as the world’s third-largest economy struggles to get rid of the pandemic blow and the global picture darkens.
“Exports are expected to slow in the long run due to the global tightening of financial policy, which could undermine companies’ appetite for investment,” said Takeshi Minami, lead economist at the Norinchukin Research Institute.
“Japan’s export-oriented economy will lose momentum towards the end of this year and early next year due to fears of a slowdown. “
Finance Ministry data showed Wednesday that exports rose 19. 0 in July from a year earlier, recording 17 consecutive months of increases in car shipments to the U. S. U. S. and chip-related shipments to China, beating expectations for an 18. 2 percent increase.
Imports rose 47. 2 percent in July year-on-year to a record 10. 2 trillion yen ($76. 06 billion), driven by the costs of crude oil, coal and herbal liquid fuels. 1. 4368 billion yen in July.
This marked a full consecutive year of industrial deficits per month, the longest series of the 32-month series of deficits through February 2015.
The yen’s 23. 1 percent drop from a year earlier added to import costs, the data showed.
CAPEX RETURN BUT RISKS TO COME
Separate data showed new machinery orders in Japan, a key gauge of capital spending, rose 0. 9% in June from last month, reversing last month’s decline but below the 1. 3% increase expected by economists.
In April-June, orders for fundamental machinery increased by 8. 1% compared to the last quarter, recording the fastest expansion since the last quarter of 2020. Companies expect a 1. 8% drop in base orders from July to September, below the forged expansion seen in the fourth moment, a government official told reporters.
However, there are problematic dangers such as China’s economic slowdown and the resurgence of COVID-19, the official added.
Reflecting business resilience, Reuters’ Tankan manufacturer confidence index rose four numbers to thirteen in August and is expected to rise to 15 in the next three months.
The sector’s index rose to 19 from 14 in July and stabilized in November, helped in part by the removal of coronavirus brakes in industries such as tourism and restaurants.
($1 = 134,1000 yen)
(Reporting via Tetsushi Kajimoto; Editing via Sam Holmes)