Japan exports rise for third straight month

Japan s exports extended double-digit gains for a third consecutive month in April, but surging global commodity costs inflated the country's import bill to a new record, adding to worries about the rising cost of living.

The possibility of a private demand-led recovery was a gauge of capital expenditure, which posted its first monthly gain in three months.

The yen fell to two-decade lows below 131 to the dollar earlier in May, which stoked fears of worsening terms of trade and added financial burdens for the resource-poor Japanese economy, as import costs soar, according to the mixed data on Thursday.

A weak yen, once considered a boon to the export-led economy, is now having less of an impact as shipments grow smaller, due to the shift by Japanese manufacturers to offshore production.

Japan's exports increased 12.5% in April from a year ago, according to Finance Ministry data, led by U.S.-bound shipments of cars and undershooting a 13.8% increase expected by economists in a Reuters poll.

It followed a 14.7% rise in March. Imports rose 28.2% in the year to April compared to the median estimate for a 35.0% increase, as a weaker yen helped boost already surging commodity prices.

Takeshi Minami, chief economist at the Norinchukin Research Institute, said import gains caused by rising crude oil prices and a weak yen mean a transfer of national wealth to oil-producing nations.

Japan's economic recovery depends on coronavirus developments at home and China as the lockdown in Shanghai has disrupted supply-side and consumer activity. A trade deficit of 839.2 billion $6.54 billion was narrower than the median estimate for a 1.150 trillion shortfall, but posted a ninth straight month in the red.

The risks of prolonged cost-push inflation to the fragile economy are being warned of by external factors, not domestic demand, pushing import bills higher.

Japan's core machinery orders rose 7.1% in March from the previous month, compared to a 3.7% increase predicted by economists in a Reuters poll.

The volatile data series, regarded as a leading gauge of capital expenditure in the coming six to nine months, provided a glimmer of hope for a domestic demand-led recovery.

Japan's economy shrank in January-March due to COVID 19 curbs on the service sector and rising commodity prices creating new pressures.