Japan’s export growth stays solid, supported by chips and cars

Japan’s export growth remained solid in September, with shipments of chips and cars rising.

The value of exports rose 16.7% from a year earlier, the Finance Ministry reported Wednesday. That missed economists’ median forecast of a 21.3% increase. Exports have risen for 13 straight months.

Imports rose 18.9%, compared with economists’ estimate of a 20.4% advance. The trade balance was an unadjusted ¥536 billion ($3.4 billion) deficit, compared with a ¥1.1 trillion deficit in August.

The gain in exports highlighted ongoing demand related to artificial intelligence. Shipments of semiconductors and chip-making equipment surged 49.4% and 43.9%, respectively. Car exports gained 15.1%.

By destination, shipments to the U.S. gained 22.9%. Those to China and the European Union advanced 8.6% and 10.5%, respectively.

Imports of crude oil gained 51.1% by value, compared with a 3.1% increase in volume, as oil prices remained elevated due to tensions in the Middle East.

“Demand for AI-related products remains strong, with semiconductor exports rising, and I expect this trend to continue without any oversupply for the foreseeable future,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “The situation in the Middle East is spiraling out of control, so high oil prices are likely to persist for some time.”

Japan has been reducing its dependence on oil from the region by cultivating alternative sources. Japan’s crude oil imports from the U.S. jumped 820% by value in September, while shipments from the Middle East gained 1.5% by value. In volume terms, oil imports from the region fell 30%.

Japan’s trade surplus with the U.S. was ¥393 billion. U.S. President Donald Trump’s administration has imposed higher tariffs on Japanese goods in an effort to narrow the U.S. trade deficit with Japan. The two nations struck a trade deal last year that capped tariffs at 15% on most Japanese products in exchange for Tokyo’s pledge to increase investment in the U.S.

The yen traded at ¥157.43 against the dollar, on average, in September, 6.7% weaker than a year earlier, according to the ministry. A weaker yen makes it more expensive to import materials while it gives exporters a competitive advantage overseas.