Japan exports knocked by weak U.S. shipments, hurt economic recovery

Wed Sep 17, 2014 9:17pm EDT
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By Stanley White

TOKYO (Reuters) - Japan's exports declined in August as shipments to the United States contracted, another sign the economy is struggling to rev up after a deep slump in April-June.

A further period of lackluster exports and slack domestic demand could force the government and the Bank of Japan to find new ways to prop up the economy.

Exports fell 1.3 percent in August from a year ago, less than the median estimate for a 2.6 percent annual decline. That followed a 3.9 percent annual gain in the previous month after having fallen in June and May.

The patchy performance has dashed hopes that external demand can offset a consumer spending slump caused by an April sales tax hike to 8 percent from 5 percent, heaping pressure on policymakers to do more to spur economic growth.

"The U.S. economy is recovering, so things should not be this bad," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

"The data do reflect a shift in production overseas. I don't think monetary policy easing is needed, but there are doubts about how the overall economy will perform in the third quarter."

Japan's economy shrank an annualized 7.1 percent in the second quarter hit by the tax hike, the biggest contraction since the 2009 global financial crisis.

Underperforming exports have been one of the weak links in the Japanese economy, which is struggling to cope with the April tax hike.   Continued...

A worker rides a bicycle in a container area at a port in Tokyo May 21, 2014. REUTERS/Toru Hanai