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Japan's export growth in sharp September slowdown

Robot assembler work on cars during the assembly process at Nissan Motor Company's Kyushu Plant on November 23, 2007 in Kiyakyushu, Japan.
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Robot assembler work on cars during the assembly process at Nissan Motor Company's Kyushu Plant on November 23, 2007 in Kiyakyushu, Japan.

Japan's annual export growth slowed for the third straight month in September, a worrying sign that overseas sales continued to drag on growth last quarter, adding to fears of a recession.

Ministry of Finance data showed exports rose just 0.6 percent in the year to September, against a 3.4 percent gain expected by economists in a Reuters poll.

That was the slowest growth since August last year and followed a 3.1 percent gain in August 2015. Compared with last month seasonally-adjusted shipments declined 1.7 percent.

Wednesday's data is the first major indicator for September and is part of the calculation of third quarter gross domestic product. A third quarter contraction would put Japan into recession, given the second quarter's negative GDP data.

China's slowdown and soft domestic demand weighed on factory output and the broader economy, although the Bank of Japan saw the effects of China's slowdown were limited for now, as it sticks to its rosy growth outlook, but that may change at the

BOJ's monetary policy review on Oct. 30. Data out on Monday showed China's economic growth dipped below 7 percent for the first time since the global financial crisis despite a barrage of stimulus measures.

Analysts worry that a China-led global slowdown could drag down the Japanese economy, keeping Tokyo under pressure to deploy fresh monetary and fiscal stimulus in the coming months.

"China-bound exports fell for a second straight month in terms of value and volume, that weighed on exports," a finance ministry official said. "We must pay the utmost attention to China."

Exports to China fell 3.5 percent in September from a year earlier, down for a second straight month and weighed by falling shipments of light oil and car parts.

Shipments to Asia - which account for about a half of Japan's overall exports - fell 0.9 percent in the year to September. That was the first decline in seven months.

Exports to the United States, a major buyer of Japanese products, rose 10.4 percent in September, led by brisk shipments of cars. That followed a 11.1 percent annual gain in August.

Reflecting ongoing falls in oil prices, imports fell 11.1 percent in the year to September, largely in line with economists' estimates.

The trade balance was a deficit of 114.5 billion yen ($955 million), versus an 84.4 billion yen surplus seen by economists, marking six straight months of deficits.