TOKYO – Japan’s exports grew the most since 2010 in April while capital spending perked up on surging global demand for cars and electronics, lifting hopes that an improvement in trade could help lead the world’s third-largest economy back to growth.
Also brightening the outlook, confidence among the nation’s manufacturers hit a more than two-year high in May on the back of solid overseas orders, a Reuters survey showed on Thursday (May 20).
While the stronger exports and imports are partly helped by the favourable statistical base effects from the major plunge in trade seen a year earlier, real demand is also on the mend.
Global appetite for cars and electronics has picked up since last year, driven by a recovery in the United States and Chinese economies – Japan’s key markets – although global chip shortages put a drag on overseas shipments in recent months.
Exports rose 38 per cent in April from a year earlier, official data showed on Thursday, compared with a 30.9 per cent increase expected by economists and following a 16.1 per cent rise in March.
That was the fastest gain since April 2010, led by US-bound shipments of cars and car parts and Chinese demand for chip-making equipment.
“The trade data confirmed that exports were recovering steadily. Particularly car exports, which fell a lot last year, are picking up,” said Meiji Yasuda Research Institute chief economist Yuichi Kodama.
“In Japan, capital spending tends to move in sync with external demand, so an export recovery is encouraging for machinery orders and capital expenditure.”
By destination, exports to China, Japan’s largest trading partner, rose 33.9 per cent year-on-year in April, led by shipments of chip-making equipment, hybrid cars and scrap copper.
US-bound exports grew 45.1 per cent in the year to April, the fastest gain since 2010, on the back of demand for automobiles, car parts and ship engines.
Separate data from the Cabinet Office showed Japan’s core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 3.7 per cent in March from the previous month.
The rise in core orders, which exclude those of ships and electric utilities, compared with a 6.4 per cent increase seen in a Reuters poll of economists, the data showed.
The Cabinet Office maintained its assessment on machinery orders, saying that a pick-up is stalling.
Japan’s economy fell back into decline in the first quarter and economists have sharply revised down estimates for growth this quarter as emergency curbs hobble consumer spending that makes up more than half the economy.
“Export growth is welcome for the Japanese economy, but that doesn’t mean the whole of Japan can benefit from it,” said Sumitomo Mitsui Trust Bank market strategist Ayako Sera.
“What’s important now is a recovery in service-sector activity helped by a progress on coronavirus vaccination.”