Japan’s Export Slump Deepens, Signaling Weak Recovery

Japan’s export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived.

Shipments abroad fell 36.5 percent from a year earlier, steeper than June’s 35.7 percent drop, the Finance Ministry said today in Tokyo. The median estimate of 23 economists surveyed by Bloomberg News was for a 38.4 percent decrease.

Overseas shipments were the main driver of Japan’s 3.7 percent annualized growth last quarter as governments worldwide poured more than $2 trillion into their economies to spur demand. Weakness in exports may weigh on an economy where consumers at home are paring spending amid near-record unemployment and unprecedented drops in wages.

“Exports are very likely to run out of steam soon,” said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. “Japan won’t be able to undergo a solid recovery until the end of next year.”

The yen traded at 94.05 per dollar at 9:13 a.m. in Tokyo from 94.04 before the report was published.

Companies are still reeling from a collapse in demand that caused shipments to drop at an unprecedented rate earlier this year. Nippon Steel Corp., the world’s second-largest steelmaker, last month widened its first-half loss forecast by 33 percent.

Toyota Motor Corp., Japan’s largest automaker, and Nissan Motor Co., the third biggest, led a ninth straight drop in domestic auto production in June as exports to the U.S. plummeted, according to the Japan Automobile Manufacturers Association.