Japan exports rise for third straight month as commodity costs soar

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Japan exports rise for third straight month as commodity costs soar

A cargo ship and containers are seen at an industrial port in Tokyo.

TOKYO Reuters -- Japan exported a third straight month of double-digit gains in April, led by U.S. demand but rising global commodity costs inflated the country's import bill to a new record, adding to worries about the rising cost of living.

The prospects of a private demand-led recovery were a gauge of capital expenditure that posted its first monthly gain in three months.

On Thursday, the yen fell to two-decade lows above 131 to the dollar, which sparked 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 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 earlier, according to Ministry of Finance data, led by U.S.-bound shipments of cars and undershooting a 13.8% increase expected by economists in a Reuters poll. It was followed by a 14.7% rise in March.

Imports increased 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.

A trade deficit of 839.2 billion yen was $6.54 billion yen, slightly less than the median estimate for a 1.150 trillion yen shortfall, but posted a ninth straight month in the red.

There are risks of prolonged cost-push inflation to the fragile economy because external factors, not domestic demand, pushing import bills higher, according to analysts.

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 for the first time in two quarters in the January-March period as COVID 19 curbs hit the service sector and surging commodity prices created new pressures.