Japanese Exports Fell 36% in August, 11th Decline

By Jason Clenfield and Kyoko Shimodoi

Sept. 24 (Bloomberg) -- Japan’s exports fell for an 11th month in August as the economic recovery struggled to gain traction.

Shipments abroad dropped 36 percent from a year earlier compared with a 36.5 percent decline in July, the Finance Ministry said today in Tokyo. From a month earlier, exports fell 0.7 percent, the second straight decrease.

Today’s report suggests the boost in overseas demand that helped the economy expand in the second quarter may be moderating as governments exhaust stimulus spending. New Prime Minister Yukio Hatoyama meets his counterparts from the Group of 20 nations in Pittsburgh today to discuss how to sustain a recovery from the worst global recession since the 1930s.

“Even with all those global stimulus measures, the recovery in exports has been extremely slow,” said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. “Final demand worldwide remains weak.”

The yen rose to 91.19 per dollar at 10:22 a.m. in Tokyo from 91.38 before the report. The Japanese currency’s 7 percent gain over the past six months has added another headwind for exporters by eroding the value of their profits earned abroad.

Finance Minister Hirohisa Fujii said last week that he didn’t support a “weak yen,” causing the currency to surge. Investors are seeking to gauge the exchange-rate views of the Democratic Party of Japan-led government after it took power for the first time last week.

Obon Holidays

The year-on-year drop in exports was in line with the 36.5 percent forecast by economists. The 0.7 percent monthly decline may have been overstated by the country’s Obon holidays, a period when Japanese often take vacations to honor ancestors and which isn’t factored into the seasonal calculation, the Finance Ministry said.

Imports fell 41.3 percent in August from a year earlier, leaving a trade surplus of 185.7 billion yen ($2 billion).

Bank of Japan Governor Masaaki Shirakawa said last week he’s concerned the recovery may not outlast the worldwide stimulus packages that boosted demand for the country’s cars and electronics. The central bank cited exports as the main reason for raising its assessment of the economy last week, as record unemployment and slumping wages weaken consumer spending.

“So much of what’s keeping Japan’s economy going is temporary: the inventory, the stimulus measures,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “When the boost from those things fades, shipments -- along with the growth they’ve brought -- will flatten out.”

U.S. Improvements

Exports to the U.S. declined 34.4 percent from a year earlier, the least since November, the ministry said. Shipments to China, Japan’s biggest market, fell 27.6 percent, and sales to Europe slid 45.9 percent.

The world’s second-largest economy grew at an annual 2.3 percent pace in the three months ended June 30, ending Japan’s worst postwar recession. Some $2 trillion in spending by governments worldwide spurred sales for companies from Toyota Motor Corp. to Sharp Corp.

“Exports are definitely headed toward a recovery, thanks to inventory adjustments and global stimulus measures,” said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Securities Co. in Tokyo. “The level of exports is still low but this pickup is certainly something we should be pleased with.”

‘Cash for Clunkers’

Government incentives to encourage car-buying in the U.S., Germany and China are helping sales at automakers such as Toyota and Nissan Motor Corp. Auto sales in China, which this year became the world’s biggest car market, rose a record 90 percent in August. President Barack Obama’s “cash-for- clunkers” program helped U.S. car sales gain for the first time in almost two years last month.

“The car companies have been huge beneficiaries of all of these stimulus packages,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “It’s not misplaced money because auto production has such widespread knock-on effects on other manufacturers.”

Parts suppliers such as Toyota Boshuku Corp. are seeing sales recover. The company said in July it plans to build a new domestic factory to supply Toyota with car seats.

China’s 4 trillion yuan ($585 billion) stimulus package is also benefiting Japanese exporters. Sharp says subsidies for household appliances will help boost its China sales about 3 percent this year, even as revenue drops in the U.S. and Europe. Komatsu Ltd.’s sales of construction equipment in China climbed about 60 percent last month.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net