Japan’s Exports Continue to Fall Despite Global Green Shoots

(Bloomberg) -- Japanese exports dropped for a 12th straight month in November, offering no clear indication yet of a pickup despite recent signs of green shoots in global manufacturing.

The value of shipments overseas fell 7.9% in November from a year earlier, dragged down by sliding exports of cars and construction and mining equipment, data from the Ministry of Finance showed Wednesday. Economists forecast an 8.9% drop.

The drop extended the longest streak of declining Japanese exports since 2016, but analysts said the slightly-better-than-expected figures suggest the slump is at least bottoming. Shipments to China, Japan’s biggest overseas market, fell by the least since February.

Key Insights

• The ongoing drop in overseas shipments adds to headwinds facing a Japanese economy forecast to shrink 2.6% this quarter as growth also takes a hit from domestic factors, including typhoon damage and a recent hike in the sales tax.
• Tech-related exports offered some signs of improvement, though the data was mixed. Overseas shipments of semi-conductor making equipment rose 4.1% in value terms, much better than the average double-digit declines of April-September, but the volume of shipments still fell nearly 8%. Chip exports fell by just 1.3% while volumes eked out a gain.
• “With signs the worst is over for the global slowdown, exports should come back into positive territory sometime in the first half of next year,” said economist Takeshi Minami at Norinchukin Research Institute.
• The Bank of Japan says uncertainty surrounding overseas economies presents the biggest risk to its forecasts, but a $120 billion spending package unveiled this month by the Abe administration has given the BOJ breathing room to hold off from adding stimulus at its meeting Thursday, and over the coming months.
• Better factory data from China and Germany and an uptick in purchasing manager’s indexes in Asia suggest global manufacturing is finishing 2019 on less shaky footing. That could mean a less gloomy outlook for exports next year. A phase one trade deal between Washington and Beijing is also positive, though details remain vague.

What Bloomberg’s Economist Says

“Looking ahead, the outlook for exports remains weak, given slowing external demand. Still, net exports -- which feed into the GDP growth calculation -- could hold up in 4Q as imports fall due to the sales-tax hike.”

--The Asia Economist Team

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• Imports dropped 15.7% in November. Economists projected a 12.8% drop.
• The trade balance was a 82.1 billion yen deficit, compared with
• Exports to China fell 5.4%, while shipments to the EU declined 7.5%. Those to the U.S. slid 12.9%, the most since 2016.

--With assistance from Tomoko Sato and Toru Fujioka.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Jason Clenfield, Paul Jackson

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