Japan's Exports Rise 23.2% on Chip Equipment and Cars, but Volumes Grow Only 5.2%

Japanese exports rose 23.2% in July from a year earlier, the fastest rate since October 2022 and the fifth consecutive month of acceleration, CNBC reported. Economists had expected 19.9%. Semiconductor equipment shipments rose 49.1% by value and motor vehicle exports rose 19.5%. Shipments to China gained 25.8% and shipments to the United States gained 22%.

The Japan Times noted that Japanese manufacturers have so far absorbed the disruption from the Middle East conflict, including higher energy input costs and longer shipping routes.

The composition of that headline gain is worth examining. Export volumes rose 5.2%. The remaining increase came from higher prices measured in a currency that remains weak against the dollar. Japanese exporters book more yen for the same physical output, which increases revenue and corporate profit as reported in yen, without any rise in actual production.

The other driver is concentrated in one industry. Artificial-intelligence capital spending is driving demand for semiconductor manufacturing equipment, a sector where Japanese firms hold a large share of the global market. Globes reported that chip companies lifted Asian markets on Thursday morning, with a firmer open expected on Wall Street.