Japan, China, struggle to grow, figures show

Data released Thursday showed Asia's top economies continue to struggle, as Japan's exports fell and Chinese manufacturing continued to contract.
Japan posted a smaller-than-expected trade deficit of $9.6 billion US for August, as exports to Europe and other Asian countries plunged. (Koji Sasahara/Associated Press)

Data released Thursday showed Asia’s top economies continue to struggle, as Japan's exports fell and Chinese manufacturing continued to contract.

Japan posted a $9.6 billion US trade deficit for August as shipments to Europe and Asian countries sank, further undermining hopes for an export-driven revival in the world's third-biggest economy.

The 754.1 billion yen ($9.4 billion Cdn) deficit in August was not much smaller than the $9.9 billion deficit reported a year earlier, the Finance Ministry reported Thursday.

Exports in August totalled 5.05 trillion yen ($63.13 billion), down 5.8 per cent from a year earlier, while imports fell 5.4 per cent to 5.8 trillion yen ($72.5 billion).

And a private survey of manufacturers in China showed activity fell again in September, though at a slightly slower pace than August.

The preliminary reading of a Chinese purchasing managers’ index compiled by HSBC and Markit Economics came in at 47.8, compared with a final 47.6 last month. A reading below 50 suggests contraction.

The figures came out the same day as a widely-watched measure of activity in Europe — the Markit purchasing managers' index — fell to 45.9 in September from 46.3 the previous month, suggesting the region appears headed for a deepening economic recession.

Strong yen hurts exports

The strong Japanese yen has bit into exports while demand has evaporated in crisis-stricken Europe. Meanwhile, the country's energy imports have risen following closures of most of its nuclear plants.

Exports to Europe dived 28 per cent in August from a year earlier to 484.9 billion yen ($6.1 billion) while exports to Asia — Japan's biggest overseas market — sank 6.7 per cent overall to 2.84 trillion yen ($35.5 billion).

Japan's central bank, which on Wednesday announced it would boost the size and duration of a government bond-buying program to spur growth, forecast little change in the immediate future.

"Exports and industrial production are expected to remain relatively weak for the time being," the Bank of Japan said in its monthly report, released Thursday.

"These data suggest global growth is yet to turn the corner, mitigating some of the positive market impact from the recent policy actions by the European Central Bank, Federal Reserve and Bank of Japan," said Vassili Serebriakov, an analyst at Wells Fargo Bank.

"There have been clear signs this week that the shine has come off the summer's boost in optimism," said Jane Foley, an analyst at Rabobank International.

"That said, these corrections remain modest in light of the moves registered since July."

With files from The Associated Press