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Japan's September exports slip for tenth month, builds pressure on BOJ to ease next week

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Japan's September exports slip for tenth month, builds pressure on BOJ to ease next week
FILE PHOTO: Shipping containers are seen at a port in Tokyo, Japan, March 22, 2017. REUTERS/Issei Kato   -   Copyright  Issei Kato(Reuters)
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By Daniel Leussink

TOKYO (Reuters) – Japan’s exports contracted for a 10th straight month in September, raising speculation the central bank could ease monetary policy as soon as next week to counter heightening overseas risks and a slowdown in demand.

Exports in September slumped 5.2% from a year earlier, Ministry of Finance data showed on Monday, dragged down by car parts and semiconductor production equipment.

The fall was larger than a 4.0% drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.

In volume terms, exports fell 2.3% in the year to September, the second consecutive month of declines.

The extended fall in exports comes after the government lowered its assessment of the economy on Friday, raising a warning flag over weakness in exports.

Markets are rife with speculation the BOJ could ease at its Oct. 30-31 meeting, after it said at its rate review last it would take a more thorough look at whether heightening overseas risks could derail Japan’s fragile economic recovery.

The BOJ will “certainly” reduce short- to medium-term interest rates if it needed to ease monetary policy, Governor Haruhiko Kuroda told Reuters on Saturday.

Risks to the global economy have risen from a bitter trade war between the United States and China, darkening the outlook for Japan’s economy, the world’s third-largest.

That, among other factors, has triggered calls from some Japanese policymakers the government is ready to take fiscal measures if extra economic support was needed.

By region, exports to China, Japan’s biggest trading partner, slipped 6.7% year-on-year in September, down for the seventh month as shipments of auto parts declined.

Exports to Asia, which account for more than half of Japan’s overall exports, dropped 7.8% in the year to September, falling for the 11th month.

Japan’s exports to the United States fell 7.9% in the year to September, weighed down by reduced shipments of cars of 3000cc and higher.

Japan’s overall imports dropped 1.5% year-on-year, a smaller decline than the median estimate for a 2.8% decrease.

The trade balance came to a deficit of 123.0 billion yen (881 million pounds), versus a 54.0 billion yen surplus seen by economists.

(Reporting by Daniel Leussink; Editing by Sam Holmes & Shri Navaratnam)

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