By By Makiko Yamazaki
TOKYO (Reuters) – Japan’s exports rose at a much slower-than-expected pace in August and shipment volumes continued to slide, data showed on Wednesday, a sign that slowing global demand was weighing on a fragile economic recovery.
Japan is seeking to drive sustainable economic growth, backed by higher wages and solid consumption, though external risks from a potential slowdown in the U.S. and a weak Chinese economy are clouding the outlook.
Total exports rose 5.6% year-on-year in August, up for a ninth straight month, data showed, less than a median market forecast for a 10% increase and following a 10.3% rise in July.
Overall shipment volumes fell 2.7% last month from the year-ago period, the seventh consecutive month of declines.
Exports to China, Japan’s biggest trading partner, rose 5.2% in August from a year earlier, while those to the United States were down 0.7%, the data showed.
Imports grew 2.3% in August from a year earlier, versus a 13.4% increase expected by economists.
As a result, the trade balance stood at a deficit of 695.3 billion yen ($4.90 billion), compared with the forecast of a deficit of 1.38 trillion yen.
A rise in personal consumption helped Japan’s economy rebound strongly in the second quarter from a slump at the start of the year, but the growth was revised down slightly last week.
In a sign of the economic fragility, a Reuters monthly poll showed last week that business confidence at big Japanese manufacturers sank to a seven-month low in September, with managers across a wide range of sectors citing soft Chinese demand as a concern.
The Bank of Japan is expected to keep monetary policy steady at a two-day meeting that ends on Friday, but signal that further interest rate hikes are coming and highlight progress the economy is making in sustaining inflation around its 2% target.