FILE PHOTO: Containers are seen at an industrial port in the Keihin Industrial Zone in Kawasaki, Japan September 12, 2018. REUTERS/Kim Kyung-Hoon
November 17, 2021
By Kantaro Komiya and Daniel Leussink
TOKYO (Reuters) -Japan’s exports snapped seven months of double-digit growth in October due to slowing car shipments, as global supply constraints hit the country’s major manufacturers.
The slowing growth shows Japan’s vulnerability to supply chain bottlenecks that have been particularly disruptive for the car industry and have clouded the outlook for trade.
Exports rose 9.4% year-on-year in October, Ministry of Finance data showed on Wednesday, slightly below a median market forecast for a 9.9% increase in a Reuters poll. It followed 13.0% growth in the prior month and was the weakest expansion since a decline in February. Car shipments fell 36.7%.
“While carmakers are planning ‘revenge production’ in November and December, clouds still loom – semiconductor shortages will last until year-end at least, and no one knows if carmakers’ plans to avert the impact of chip shortages by adjusting their supply chains would succeed,” said Ryosuke Katagi, market economist at Mizuho Securities.
“Dragged down by staple cars, sluggish export growth will last for the rest of 2021.”
By region, exports to China, Japan’s largest trading partner, increased 9.5% in the 12 months to October, slowing from 10.3% in the previous month as car shipments to the country fell 46.8%.
U.S.-bound shipments, another key market for Japanese goods, grew just 0.4% in October, also weighed by declining car exports, which fell 46.4%.
Imports rose 26.7% in the year to October, below forecasts for a 31.9% increase, bringing the trade balance to a deficit of 67.4 billion yen ($586.60 million), compared with the median estimate for a 310.0 billion yen deficit.
Separate government data showed core machinery orders, which serve as a leading indicator of capital spending in the coming six to nine months, were flat in September from the prior month, missing an expected 1.8% gain.
The weaker-than-expected core orders signal corporate Japan’s reluctance to commit to firmer capital spending as supply bottlenecks pose a risk to the outlook.
Manufacturers expected core orders to rise 3.1% in October-December, after a 0.7% gain in the previous quarter.
Japan’s economy shrank faster than expected in the third quarter due to declining consumption, business spending and exports, which suffered from a resurgence in COVID-19 infections and chip and parts supply disruptions.
The government is expected to announce a fiscal stimulus package worth “several tens of trillion yen” on Friday, aimed at easing the pain of the COVID-19 pandemic and reviving the economy.
($1 = 114.9000 yen)
(Reporting by Kantaro Komiya and Daniel Leussink; Additional reporting by Kentaro Sugiyama; Editing by Sam Holmes)
Source: One America News Network
