Japan's Exports Fall for First Time in Four Years

By Jason Clenfield

July 24 (Bloomberg) -- Japan's exports unexpectedly fell for the first time in more than four years in June, led by a drop in demand from the U.S. and Europe.

Exports declined 1.7 percent from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 20 economists surveyed by Bloomberg News was for a 3.3 percent gain. It was the first time shipments abroad fell since November 2003.

The world's second-largest economy probably shrank last quarter as the U.S. slowdown and record oil prices took a toll on global demand for Japanese cars and cameras. The Bank of Japan last week cut its economic growth forecast and said the expansion will cool further as higher commodity prices weaken spending by consumers and companies.

``We expect real gross domestic product growth to contract, albeit modestly, in the second quarter,'' said Hiroshi Shiraishi, an economist at Lehman Brothers in Tokyo.

Imports rose 16.2 percent, the fastest pace in 11 months, as crude oil climbed to a record. That caused the trade surplus to shrink 88.9 percent to 138.6 billion yen ($1.3 billion). Economists predicted a surplus of 500 billion yen.

The yen traded at 107.92 per dollar at 9:09 a.m. in Tokyo from 107.93 before the report was published.

Shipments to the U.S., where consumer confidence is close to the worst level since 1980, dropped for a 10th month in June and exports to Europe fell for a second month, the ministry said.

Toyota's Sales

Toyota Motor Corp.'s first-half sales fell 7 percent in North America and Europe and sales growth in China was less than the company projected, the Nikkei newspaper said yesterday. According to a separate report by the Bangkok Post, Toyota is forecasting a drop in Thai truck sales this year for the first time in a decade.

Slowing demand pushed sentiment among Japan's largest manufacturers to a four-year low in June and companies said they expect earnings to decline for the first time since 2001, leaving them with less to spend on factories and hiring.

Still, sales to Asia, led by China, have cushioned the effect of the U.S. slowdown. Shipments to oil-rich and commodity producing countries have also buoyed growth.

``As much as anything else, China's growth is the reason why the global economy has been able to skirt recession,'' said David Cohen, director of Asian Forecasting at Action Economics in Singapore.

Komatsu Ltd., Japan's largest maker of earthmovers, had record profit in the three months ended June 30 because of sales to China and other emerging markets, the Nikkei said this month.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net