Japan’s exports climbed 23.2% in July compared to the same month last year, marking the quickest annual export gain since October 2022 and the fifth consecutive month of accelerating growth. Economists had previously projected a smaller increase of 19.9%.
Stronger semiconductor equipment sales and increased trade with China drove the performance. Japan shipped 49.1% more semiconductor machinery by value than a year earlier, fueled by ongoing investments in hardware for artificial intelligence. China remained Japan’s top trading partner, with imports from Japan into China growing by 25.8%, while exports to America increased by 22%.
While export values surged, the physical volume of exports grew by only 5.2%. Price increases and a weak currency contributed significantly to the higher export value. A weak currency allows Japanese producers to offer lower prices abroad, but it also increases the national currency required to buy imports.
Concurrently, Japan's imports increased by 27.8% in July compared to the previous year, exceeding analysts' predictions of a 26.5% rise. Higher oil prices played a major role, as the petroleum import bill jumped 87.8% amid the Iran war, increasing energy costs for households and businesses.
Following the data release, the Nikkei 225 rose 0.64%, while the yen slipped 0.11% against the dollar to trade at 158.35.
Japan recorded an annualized economic growth rate of 1.1% in the second quarter, falling short of the 2% estimate from economists and down from a 2.1% annualized rate in the previous quarter. Foreign trade contributed 0.5 percentage points to second-quarter GDP, while domestic demand reduced growth by 0.2 percentage points.
