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Title: Japan posts longest run of trade gaps in 7 years as import costs soar

Aug 17, 2022 12:40AM ET

By: AnalysisWatch

Japan's imports jumped to a record in July, boosted by global fuel inflation and a weak yen, outpacing exports and widening the trade deficit, a sign of further deterioration in the terms of trade for the export-oriented economy.

The trade data came amid Reuters' Tankan data, which showed an improvement in business sentiment in Japan in August, while a key gauge of corporate capital spending rebounded in June after the previous month's decline.

Shipments of cars from the US and chips from China rose 19.0% in July from a year earlier, marking 17 consecutive months of growth, led by shipments of cars from the US and chips from China, beating expectations for 18.2% growth.

Imports rose 47.2% year-on-year in July to a record 10.2 trillion yen ($76.06 billion), driven by the price of crude oil, coal, and liquefied natural gas. These exceeded expectations for growth of 45.7% and depressed exports, with the trade deficit reaching 1.4368 trillion yen in July.

It marked a full consecutive year of monthly trade deficits, the longest streak since the 32-month deficit until February 2015.

The data showed a 23.1% year-on-year fall in the yen exchange rate contributed to higher import spending, the data showed.

Separate data showed that new machinery orders in Japan, a key gauge of capital spending, rose 0.9 percent in June from the previous month, reversing the previous month's decline but falling below economists' expectations of a 1.3 percent increase.

In the April-June period, core machinery orders rose 8.1% from the previous quarter, marking the fastest growth since the final quarter of 2020.

A government official told reporters that firms are expecting a 1.8 cline in core orders for the July-September period, which would pull back from the solid growth seen in the second quarter.

Reflecting corporate resilience, the Reuters Tankan index of producer sentiment rose 4 points to 13 in August and is expected to continue rising to 15 over the next three months.

$1 = 134.1000 yen



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