Japan’s exports are growing at a slower pace, straining a fragile economic recovery By Reuters

By Makiko Yamazaki

TOKYO (Reuters) – Japanese exports grew at a much slower pace than expected in August and shipping volumes continued to fall, data showed on Wednesday, a sign that slowing global demand has hurt a fragile economic recovery.

Japan is trying to push for sustainable economic growth, supported by higher wages and solid consumption, although external risks from a potential slowdown in the US and a weak Chinese economy cloud the outlook.

Total exports rose 5.6 percent year-on-year in August, up for a ninth consecutive month, the data showed, less than the market’s median forecast for a 10 percent rise and after a 10.3 % in July.

Total shipments fell 2.7 percent last month from a year ago, the seventh straight month of declines.

Exports to China, Japan’s biggest trading partner, rose 5.2 percent in August from a year earlier, while those to the United States fell 0.7 percent, the data showed.

Imports rose 2.3 percent in August from a year earlier, compared with a 13.4 percent rise 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 surge in personal consumption helped Japan’s economy rebound strongly in the second quarter from a slump earlier in the year, but growth was revised down slightly last week.

In a sign of economic fragility, a monthly Reuters poll showed last week that business confidence at Japan’s top manufacturers fell to a seven-month low in September, with managers across a range of sectors citing weak demand in China.

The Bank of Japan is expected to hold monetary policy steady at a two-day meeting ending Friday, but signals further interest rate hikes are ahead and highlights the progress the economy is making in supporting inflation around its 2 percent target.