Mubasher: Japanese exports continued to drop for the sixth month in a row, as China-bound shipments faltered, indicating pressure from slowing external demand which clouded growth outlook for the trade-dependent economy.

The world’s third biggest largest economy saw its exports May plunging by 7.8% year-on-year, the Ministry of Finance data showed on Wednesday.

Meanwhile, total imports to Japan fell by 1.5% on annualised basis in May.

This resulted in a trade balance deficit of 967.1 billion Japanese yen (JPY) ($8.92 billion), recording the fourth consecutive month in the red.

The export drop last May followed a 2.4% year-on-year drop in April, while it was caused by a fall of 9.7% in exports to China, Japan’s biggest trading partner.

Japanese shipments of chip-making equipment to China dropped nearly 28%, while exported semiconductor-manufacturing parts and auto components declined.

Many Japanese companies, tapped into Chinese market and supply chains, face mounting pressure on margins as the growth world’s second biggest economy lost steam.

Moreover, exports to Asia, which accounts for over half of Japanese exports, slid 12.1% last month.

Exports to the US rose by 3.3% on year last May, fuelled by a 9.9% surge automobile shipments, as American imports fell by 1.6%, driven by oil shipments, expanding Japan's trade surplus with the US. 

May’s gain marked the eighth monthly drop in US-bound exports, after climbing by 9.6% in the prior month.

At 7:42 am GMT, the USD/JPY pair went down by 0.06% to JPY 108.3800.