Japan exports fall in August but beat expectations

Japan's exports fell in August as U.S. shipments contracted, dashing hopes that external demand can prop up an economy dragged down by weak consumer spending.

Exports declined 1.3 percent in August from the year-ago period, following July's 3.9 percent rise, but it was better than a Reuters poll forecasting a 2.6 percent drop.

Imports fell an annual 1.5 percent, versus an expected decline of 1.2 percent and after rising 2.3 percent in July.

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Vehicles bound for shipment sit in a lot at a port in Yokohama, Japan
Tomohiro Ohsumi | Bloomberg | Getty Images
Vehicles bound for shipment sit in a lot at a port in Yokohama, Japan

This brought the country's trade deficit to 948.5 billion yen ($8.7 billion) compared with the 964 billion yen deficit in July. Analysts expected a 1.028 trillion yen deficit.

"Japan's trade deficit is likely to remain relatively high over the near term even though the weak domestic demand will help narrowing the scale of the red figures," IHS Global Insight Principal Economist Harumi Taguchi wrote in a report.

"Exports will strengthen as external demand rebounds. However, increases in overseas production have made it difficult for better competitiveness (the weaker yen) to help exports improve, whereas higher import prices could lift the value of imports," she said.

The world's third biggest economy has struggled to gain traction since a consumption tax hike in the second quarter, which shut consumers' wallets and threatened to push the economy back into recession.

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The economy contracted an annualized 7.1 percent in the three months ending in June, its worst showing since January-March 2009 when the global financial crisis hit exports and factory output.

Japan raised its consumption tax to 8 percent from 5 percent in April, in a bid to stem the country's mounting debt pile.

The U.S. dollar-Japanese yen was steady at 108.50 following the data. Japan's benchmark Nikkei index opened 0.9 percent higher on Thursday.