TOKYO Japan’s exports extended their double-digit slump into a fifth straight month in July as the coronavirus pandemic took a heavy toll on shipments to the United States, dashing hopes for a trade-led recovery from the deep recession.
Core machinery orders, a leading indicator of business spending, also fell, suggesting the economy cannot count on domestic demand either as business investment weakened.
The batch of weak data underscored the challenges for policymakers as they look to prop up economic activity after lockdowns were lifted in May, while containing a second round of infections.
Total exports fell 19.2% in July from a year earlier, compared with economists’ median forecast for a 21.0% decrease, government data showed on Wednesday. It followed a 26.2% drop in the previous month.
Exports to China, Japan’s largest trading partner, rose 8.2% in the year to July, while those to the rest of Asia were down 8.2%, the data showed.
Separate data showed core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 7.6% in June, confounding market estimates of a 2.0% gain.
“Machinery orders are declining,” the government said, revising down its assessment from the previous month when it said they were on a “weak note.”
Manufacturers surveyed by the government expect core orders to fall 1.9% in the current quarter after dropping 12.9% in April-June, the data showed.
Japan’s economy suffered a record annualised contraction in April-June as the pandemic crushed demand for cars and other exports and kept consumers at home.
Analysts expect any rebound in the current quarter to be modest as a resurgence of infections will likely put a lid on demand both at home and abroad.
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