Japan's Exports Grow 3.7% in May

Japan's exports grew at twice the pace economists estimated in May, as accelerating shipments to Asia helped the economy withstand a slump caused by falling demand from the U.S. and Europe.

Exports, which contributed at least half of Japan's growth in the past three quarters, rose 3.7 percent from a year earlier after climbing 3.9 percent in April, the Finance Ministry said today in Tokyo.

Asia, the destination of half of Japan's goods sent abroad, supported exporters including Idemitsu Kosan Co. even as the yen gained 14 percent and shipments to Europe fell for the first time in more than two years. Exports to the U.S. declined for a ninth month, and sales may worsen after consumer confidence in Japan's biggest overseas market dropped to a 16-year low.

Exports to Asia climbed 8.1 percent from a year earlier, and those to China gained 12.3 percent, led by shipments of steel, automobiles and oil products. Japan's refiners sent extra fuel to China as part of relief efforts following the May 12 earthquake that killed more than 69,000 people.

Imports advanced 4.4 percent from a year earlier as oil prices surged to a record, narrowing the trade surplus by 7.6 percent to 365.6 billion yen ($3.4 billion), the ministry said. Economists expected a surplus of 30 billion yen.

While eroding profits, the commodity price shock is also increasing sales of Japanese cars and construction equipment to resource-rich markets. Shipments to Russia, the world's biggest exporter of oil and gas, soared 58.8 percent last month.

Exports to the U.S. fell 9.5 percent and shipments to Europe slid 1.1 percent, the first drop since October 2005.

The World Bank said this month it expects global growth to slow to 2.7 percent this year from 3.7 percent in 2007 because of surging prices and the subprime credit crisis.

Japan may lose the boost that sales overseas have been providing throughout its longest postwar expansion. Exports have grown less than 4 percent on average in April and May, slowing from 6.2 percent in the first quarter. Economists predict net exports won't contribute to economic growth this quarter.

Businesses are paring production and spending on concern that demand will weaken and record oil prices will further crimp profits. Sentiment at large manufacturers marked the biggest drop in four years this quarter and companies said they plan to cut spending by 0.9 percent this year, a report this week showed.


TradingEconomics.com, Bloomberg
6/25/2008 10:33:22 AM