TOKYO- Japan’s exports snapped seven months of double-digit growth in October due to slowing car shipments, as global supply constraints hit the country’s major manufacturers.
The slowing growth shows Japan’s vulnerability to supply chain bottlenecks that have been particularly disruptive for the car industry and have clouded the outlook for trade.
Exports rose 9.4 percent year-on-year in October, Ministry of Finance data showed on Wednesday, slightly below a median market forecast for a 9.9 percent increase in a Reuters poll. It followed 13.0 percent growth in the prior month and was the weakest expansion since a decline in February. Car shipments fell 36.7 percent.
“While carmakers are planning ‘revenge production’ in November and December, clouds still loom – semiconductor shortages will last until year-end at least, and no one knows if carmakers’ plans to avert the impact of chip shortages by adjusting their supply chains would succeed,” said Ryosuke Katagi, market economist at Mizuho Securities.
“Dragged down by staple cars, sluggish export growth will last for the rest of 2021.”
By region, exports to China, Japan’s largest trading partner, increased 9.5 percent in the 12 months to October, slowing from 10.3 percent in the previous month as car shipments to the country fell 46.8 percent.
US-bound shipments, another key market for Japanese goods, grew just 0.4 percent in October, also weighed by declining car exports, which fell 46.4 percent.
Imports rose 26.7 percent in the year to October, below forecasts for a 31.9 percent increase, bringing the trade balance to a deficit of 67.4 billion yen ($586.60 million), compared with the median estimate for a 310.0 billion yen deficit.
Separate government data showed core machinery orders, which serve as a leading indicator of capital spending in the coming six to nine months, were flat in September from the prior month, missing an expected 1.8 percent gain.
