Japan's exports slipped in July as annual drops in exports to the United States and China accelerated, in a sign that the impact of stimulus measures in major economies worldwide may be starting to wane.
Exports to the United States have lagged improvements in shipments to Asia as the world's largest economy struggles to pick up steam, while the yen's rise against the dollar also played a part.
But exports to the fast-growing Chinese economy also fell at a faster annual pace as a surge in state spending and loan growth failed to mask tepid domestic demand there.
The annual fall was largely in line with market expectations, but in another sign of slowing momentum, Japan's exports fell from the previous month for the first time in two months.
Some overseas stimulus programmes have already expired, and economists warn that as such fiscal support runs its course, exports could slow while weak labour markets in the United States and Europe mean consumers won't be able to pick up the slack.
In a sign demand within Japan isn't strong either, prices for business-to-business services marked a record annual fall for the third straight month in July, as deflation deepens.
"Falls in exports have been moderating in recent months on companies' restocking efforts and government stimulus worldwide. But the July datas indicate that the recovery momentum is losing steam," said Seiji Shiraishi, chief economist at HSBC Securities.
"It is questionable whether exports will continue to recover once the stimulus effect runs out because global final demand may not turn up fully."
On a seasonally adjusted basis, exports fell 1.3 per cent in July from June, trade data showed today, the first drop in two months.
Compared with a year earlier, Japan's exports fell 36.5 per cent in July. That was slightly less than the median forecast for a 38.6 per cent fall in July, but faster than the 35.7 per cent annual decline in June.
Exports fell at a faster annual rate due to slower shipments of cars to the Middle East, Russia and the United States. Exports of steel and semiconductors to Asia also saw faster annual falls.
In July, the yen was 12.4 per cent higher against the dollar than in the same month last year, which also weighed on Japan's exports, the data showed.
Reuters