By Tetsushi Kajimoto and Daniel Leussink
TOKYO (Reuters) – Japan’s exports logged a third straight month of double-digit gains in April led by U.S. demand, but surging global commodity costs inflated the country’s import bill to a record, adding to worries about the rising cost of living.
Shoring up the prospects of a private demand-led recovery, however, was a gauge of capital expenditure that posted its first monthly gain in three months.
The mixed data on Thursday followed the yen’s falls to two-decade lows beyond 131 to the dollar earlier in May, which stoked fears of worsening terms of trade and added financial burdens for the resource-poor Japanese economy as import costs soar.
A weak yen, once considered a boon to the export-led economy, is now having less of an impact as shipments grow smaller, given the ongoing shift by Japanese manufacturers to offshore production.
Japan’s exports rose 12.5% in April from a year earlier, Ministry of Finance data showed, led by U.S.-bound shipments of cars and undershooting a 13.8% increase expected by economists in a Reuters poll. It followed a 14.7% rise in March.
Imports rose 28.2% in the year to April, versus the median estimate for a 35.0% increase, as a weaker yen helped boost already surging global commodity prices.
That resulted in a trade deficit of 839.2 billion yen ($6.54 billion), narrower than the median estimate for a 1.150 trillion yen shortfall but posting a ninth straight month in the red.
Analysts have warned of the risks of prolonged cost-push inflation to the fragile economy with external factors, not domestic demand, pushing import bills higher.
Separate data showed on Thursday Japan’s core machinery orders rose 7.1% in March from the previous month, versus a 3.7% increase expected by economists in a Reuters poll.
The volatile data series, regarded as a leading gauge of capital expenditure in the coming six to nine months, provided a glimmer of hope for a domestic demand-led recovery.
Japan’s economy shrank for the first time in two quarters in the January-March period as COVID-19 curbs hit the service sector and surging commodity prices created new pressures.
($1 = 128.3600 yen)
(Reporting by Tetsushi Kajimoto and Daniel Leussink; Editing by Sam Holmes)
