Japan’s exports rose at the fastest pace since 1980 in May and a key gauge of capital spending grew, helping the world’s third largest economy offset sluggish domestic demand as COVID-19 vaccinations boost business activity in key markets, Trend reports citing Reuters.
The jump in exports largely reflected a rebound in shipments from last year's pandemic-driven plunge, but was a welcome sign as the economy struggles to rebound from the first quarter's doldrums amid a prolonged coronavirus state of emergency.
The solid data will likely bolster the view that the central bank will stick with its ultra-easy policy at its June 17-18 policy meeting, although it may extend pandemic-relief programmes to back a fragile economic recovery. The government recently extended coronavirus emergency curbs in Tokyo and other major areas.
Ministry of Finance data on Wednesday showed exports grew 49.6% year-on-year in May, versus a 51.3% increase expected by economists in a Reuters poll, led by U.S.-bound car shipments.
The jump followed a 38% rise in April and marked the sharpest monthly increase since April 1980, when shipments surged 51.4%.
May's rise largely reflected the recoil effect of a 28.3% plunge in May of 2020.
By region, exports to China, Japan's largest trading partner, grew 23.6%, led by chip production equipment, hybrid cars and scrap copper, the trade data showed.
Exports to the United States, another key market for Japanese goods, jumped 87.9% in May, a record for year-on-year growth according to comparable data going back to January 1980, driven by cars and auto parts.
Imports rose 27.9% year-on-year in May versus a median estimate for a 26.6% gain, resulting in a trade deficit of 187.1 billion yen ($1.70 billion), against the median estimate for a 91.2 billion yen shortfall.
Separate data by the Cabinet Office showed core machinery orders, which serve as a leading indicator of capital expenditure in the coming six to nine months, rose 0.6% in April from the previous month, below an expected 2.7% gain.
The Cabinet Office left its assessment on machinery orders unchanged, saying a pick-up was stalling.
A government official said solid overseas demand for chip manufacturing equipment helped support external orders, which jumped 46.2% in April, rebounding from a 53.9% fall in March.
Core orders, which exclude those for ships and electrical utilities, grew 6.5% year-on-year in April, versus an 8.0% gain expected by economists, the data showed.
The Bank of Japan is widely expected to keep its policy interest rate at minus 0.1% and the 10-year Japanese government bond yield target at around 0% at its policy meeting this week.