Japan’s exports grow at slowest pace in eight months

TOKYO — Japan’s export growth snapped seven months of double-digit expansion in October due to slowing U.S. and China-bound car shipments, highlighting risks for the export-reliant economy from global supply constraints.

The slowing growth shows Japan’s vulnerability to supply chain bottlenecks that have been particularly disruptive for the car industry and have clouded the outlook for overseas demand.

Exports rose 9.4% year-on-year in October, Ministry of Finance data showed on Wednesday, slightly below a median market forecast for a 9.9% increase in a Reuters poll. It followed 13.0% growth in the prior month.

By region, exports to China, Japan’s largest trading partner, increased 9.5% in the 12 months to October, slowing from 10.3% in the previous month as car shipments to the country fell 46.8%.

U.S.-bound shipments, another key market for Japanese goods, grew just 0.4% in October, also weighed by declining car exports, which fell 46.4%.

Imports rose 26.7% in the year to October, versus the median estimate for a 31.9% increase, bringing the trade balance to a deficit of 67.4 billion yen ($586.60 million), compared with the median estimate for a 310.0 billion yen deficit.

Separate government data showed core machinery orders, which serve as a leading indicator of capital spending in the coming six to nine months, were flat in September from the prior month, below with an expected 1.8% gain.

The weaker-than-expected core orders signal corporate Japan’s reluctance to commit to firmer capital spending as global supply bottlenecks pose a risk to the outlook for output and exports.

Manufacturers expected core orders to rise 3.1% in October-December, after a 0.7% gain in the previous quarter.

Japan’s economy shrank faster than expected in the third quarter due to declining consumption, business spending and exports, which suffered from a resurgence in COVID-19 infections and chip and parts supply disruptions.

The government is expected to announce a fiscal stimulus package worth “several tens of trillion yen” on Friday, aimed at easing the pain of the COVID-19 pandemic and reviving the economy.

($1 = 114.9000 yen)

(Reporting by Kantaro Komiya and Daniel Leussink; Additional reporting by Kentaro Sugiyama; Editing by Sam Holmes)