Japan's exports hit a monthly record in July, underscoring resilient global demand and offering support to an economy increasingly reliant on overseas shipments to counter weak domestic demand.

Total exports by value rose 23.2 percent year-on-year to a record 11.5 trillion yen, or US$72.62 billion, in July, data showed on Thursday.

It was more than the median market forecast for a 19.9 percent increase and following a 19.3 percent rise in June.

The trade figures follow separate data this week showing Japan's economy expanded for a third consecutive quarter in April-June, with strong exports ⁠helping to offset weak private consumption and business investment.

The resilience of Japan's exports could support the case for the Bank of Japan to continue to normalise monetary policy, with the central bank set to raise rates as soon as September.

Exports to the United States in July rose 22 percent from a year earlier, while shipments to China were up 25.8 percent, the data showed.

Imports in July grew 27.8 percent from a year earlier, ⁠compared with market forecasts for a 26.5 percent increase.

As a result, Japan recorded a trade deficit of 634.5 billion yen in July, compared with a forecast for a deficit of 680 billion yen.

The conflict in the Middle East earlier this year disrupted shipping through the Strait of Hormuz and triggered a surge in crude oil, petrochemical and other commodity prices, raising Japan's import bill because the country relies heavily on overseas energy supplies.

Although oil prices retreated in June after shipping routes were partially restored, the impact on import values typically appears with a lag because customs-based import prices reflect contracts agreed weeks earlier.

Higher commodity and energy costs have also fed through supply chains, allowing many Japanese manufacturers to continue passing on costs to overseas customers.

As a result, export values ⁠have been supported by higher prices even as growth in export volumes remained subdued. (Reuters)



Edited by Tony Sabine