Japanese exports fell for a fifth straight month in April as the effects of the U.S. trade war with China and a slowdown in the global tech cycle continued to weigh on Japan’s economy.

The value of shipments abroad declined 2.4% in April from a year earlier, according to the finance ministry, matching the previous month’s drop. Economists had forecast a 1.6% fall. Ahead of President Donald Trump’s visit to Tokyo, during which trade issues are likely to be discussed, the data showed Japan’s monthly trade surplus with the U.S. rose 18% from a year earlier.

On a more positive note for the economy, machinery orders, a leading indicator of capital spending in coming months, rose for a second month in March, gaining 3.8% from April.

Key Insights

  • Pointing to both the impact of the U.S. trade war with China and softer global demand for tech-related items, the data showed exports to China falling 6.3%, with a 41% slide in equipment for making semiconductors the biggest drag on overall shipments.
  • While economists said a slight slowing in the pace of shipment declines to the world’s second-largest economy suggested the trend wasn’t worsening in April, the breakdown in U.S.-China trade talks in May bodes ill for the outlook.
  • Japan’s economic data is currently under close scrutiny by the government amid speculation that a tax hike scheduled for October might be postponed due to concerns over the strength of the economy.
  • A 9.6% gain in exports to the U.S. is an indication of the ongoing strength of demand in the world’s largest economy, though the rising U.S. trade deficit could serve Trump’s interests as he meets Prime Minister Shinzo Abe this weekend. Any mention by the two leaders of agriculture, currencies or car tariffs is likely to generate high interest.

What Bloomberg’s Economist Says

“The U.S.-China trade war is hardly good for an exporter like Japan. But, taking a ‘glass half full’ view, it’s not all bad. As we’ve noted, there are some opportunities for nimble Japanese businesses.”