By Aki Ito and Toru Fujioka
Aug. 26 (Bloomberg) -- Japan’s exports fell for a tenth straight month in July as demand from all of the nation’s major markets deteriorated.
Shipments abroad tumbled 36.5 percent from a year earlier, steeper than June’s 35.7 percent drop, the Finance Ministry said today in Tokyo. The median estimate of 23 economists surveyed by Bloomberg News was for a 38.4 percent decrease.
Manufacturers are still reeling from plunging sales of cars and electronics even as the economy emerges from its worst postwar recession. Toyota Motor Corp., Japan’s largest carmaker, said today it will cut domestic production by 220,000 vehicles.
“The U.S. hasn’t quite recovered, and China’s economy looks somewhat shaky too,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “We’re unlikely to see a recovery in exports in the short term.”
The yen traded at 94.01 per dollar at 11:20 a.m. in Tokyo from 94.04 before the report was published and advanced against all 16 major currencies tracked by Bloomberg. The Nikkei 225 Stock Average rose 0.64 percent to 10,564.56 after U.S. consumer confidence gained.
Exports may also have been eroded by the yen’s 1.7 percent advance against the dollar in July from June. A stronger yen cuts into exporters’ profits when they are repatriated back into local currency.
Declines in shipments accelerated in all major regions: Exports to China fell 26.5 percent, shipments to the U.S. slid 39.5 percent and those to Europe slumped 45.8 percent, according to today’s report.
Japan’s gross domestic product grew an annualized 3.7 percent last quarter, the first expansion in more than a year, as governments worldwide poured more than $2 trillion into their economies to spur demand.
Cement a Recovery
Prime Minister Taro Aso is struggling to cement an economic recovery as his ruling Liberal Democratic Party trails the opposition Democratic Party of Japan in polls ahead of an Aug. 30 election.
Toyota, which is shutting down an assembly line at its Takaoka plant in central Japan, and Nissan Motor Co. led a ninth straight drop in domestic auto production in June as exports to the U.S. plummeted, according to the Japan Automobile Manufacturers Association.
Nippon Steel Corp., the world’s second-largest steelmaker, last month widened its first-half loss forecast by 33 percent.
Not all economists forecast exports will continue to worsen. Robust growth in China, which overtook the U.S. as Japan’s largest overseas customer this year, will support demand, according to Kyohei Morita.
Continue Rising
“We do not believe a drop in exports would mark the start of a downward trend,” said Morita, chief economist at Barclays Capital in Tokyo. “Exports, especially to Asia and the U.S., are likely to continue rising.”
China’s economy expanded 7.9 percent last quarter, rebounding from the weakest growth in almost a decade. The nation’s 4 trillion yuan ($585 billion) stimulus to encourage consumer spending and investment in building projects has benefited Japanese manufacturers.
The Bank of Japan will release a report later today showing trade volumes on a month-on-month basis, data which correlates closely with the export component of gross domestic product, according to London-based Capital Economics Ltd.
“Japan’s exports are regaining momentum and we can expect the U.S. economy to improve and demand from China to remain brisk,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The question is how strong overseas demand will be in the fourth quarter.”
To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
Posts
No comments:
Post a Comment