Japan export growth slows, may add to concerns over recession-hit economy

Containers are loaded onto trailer trucks at the port in Tokyo on Nov 20, 2014. Japan's exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen. -- PHOTO: AFP
Containers are loaded onto trailer trucks at the port in Tokyo on Nov 20, 2014. Japan's exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen. -- PHOTO: AFP

TOKYO (Reuters) - Japan's exports grew for a third straight month in November from a year earlier, but much more slowly than expected and despite a sharp fall in the yen as slowing demand in Asia and Europe dampened trade.

The 4.9 per cent rise in exports was much weaker than a 7.0 percent gain seen by economists in a Reuters poll, slowing from a 9.6 per cent gain in October, Ministry of Finance data showed.

Weakness in exports could compound April's sales tax rise which pushed the economy into a recessionary second quarter of contraction through September.

"Exports to Asia and Europe were weak. Europe's slump caused by Russia warrants attention, but the slowdown in Asia-bound exports was probably a temporary reaction to October's big jump boosted by one-off factors such as exports of ships to Singapore," said Hiroshi Watanabe, senior economist at SMBC Nikko Securities.

"I still expect shipments to remain firm as the U.S. economy continues to help spur output in Asia and Japan. That will be welcome to Japanese policymakers."

The data followed the Bank of Japan's key tankan survey, which showed business confidence barely improved in the fourth quarter, suggesting a slow climb out of recession despite gains in share prices and a steep fall in the yen.

The yen stood at around 117 yen to the US dollar on Wednesday, after it hit a 7-year low of more than 120 earlier this month, down about 10 per cent since the BOJ's shock expansion of monetary stimulus on Oct. 31. The BOJ is expected to stand pat at a monetary policy meeting on Friday.

Exports to the United States rose 6.8 per cent in the year to November, while shipments to China rose just 0.9 percent, slowing sharply from an annual 7.2 per cent gain in October.

Exports to Asia, which account for more than half of Japanese shipments, grew 5.8 per cent in the year to November, slowing from a 10.5 per cent jump in the previous month. EU-bound exports fell 1.3 per cent, the first fall in 18 months.

Overall imports fell 1.7 per cent in the year to November, versus economists' median estimate for a 1.7 per cent gain, but still created a trade gap of 891.9 billion yen to mark the 29th consecutive month of deficit.

Export volume fell 1.7 per cent in the year to November, the first annual drop in three months. Japanese shipments have struggled to pick up because companies haved moved much of their production overseas, limiting gains from a weak currency.