Japan exports beat estimates in July as robust chip shipments power fifth

Semiconductor shipments continued to power Japan’s exports in July, helping clock the fastest growth since October 2022, beating expectations.

Exports growth accelerated for a fifth straight month, coming in at 23.2%. Economists polled by Reuters had estimated growth at 19.9%.

Shipments of semiconductor equipment posted a massive 49.1% jump in value, reflecting continued demand, boosted by the artificial intelligence boom.

In terms of destinations, shipments to China — Japan’s largest trading partner — rose 25.8%, while exports to the U.S. climbed 22%.

Despite seeing export values grow, the gains were mostly due to a weak yen and higher selling prices, with volumes only rising 5.2% in July.

The benchmark Nikkei 225 gained 0.64% after the data release, while the yen weakened 0.11% against the dollar to trade at 158.35.

Strong exports over the past few months have been instrumental in supporting Japan’s GDP. On a year-on-year basis, the economy grew at 0.7% in the second quarter, compared to 0.5% in the first three months of the year.

While GDP missed expectations on a quarter-on-quarter and annualized basis, exports helped soften the impact, with the sector being the largest contributor to economic growth.

Imports to Japan in July climbed 27.8%, the highest level since November 2022, also beating analysts’ estimates of a 26.5% gain. Due to the Iran war, the country saw a 87.8% surge in petroleum imports by value as oil prices climbed.

Japan meets over 87% of its energy needs via imports, according to the International Energy Agency.