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Japan imports surged to record in July; exports up for 17th month

47% rise driven by higher costs of crude oil, coal and liquid natural gas

An Idemitsu Kosan oil installation on Tokyo Bay in Ichihara, Chiba Prefecture.   © Reuters

TOKYO (Reuters) -- Japan's imports jumped to a record amount in July, boosted by global fuel inflation and a weak yen, outweighing exports and deepening the trade deficit, a sign of further worsening in the terms of trade for the export-oriented economy.

The trade data came on the heels of the Reuters Tankan survey, which showed improvement in Japan's business sentiment in August, while the key gauge of corporate capital spending rebounded in June from the previous month's decline.

The batch of data may help ease calls for more stimulus to back the fragile nature of Japan's recovery after the world's third-largest economy logged three straight quarters of expansion to June, led by capital spending and consumption.

The Ministry of Finance data on Wednesday showed exports grew 19.0% in July from a year earlier, posting 17 straight months of gains, led by U.S.-bound shipments of cars and China-bound chip-related goods, beating economists' expectations for an 18.2% gain.

Imports rose 47.2% in July year-on-year to a record 10.2 trillion yen ($76 billion), driven by costs of crude oil, coal and liquid natural gas, versus an expected rise of 45.7%, overwhelming exports and bringing the trade deficit to 1.4368 trillion yen ($10.69 billion) in July.

The yen's fall by 23.1% from a year earlier added to higher import costs, the data showed.

Separate data showed Japan's key gauge of capital spending rose 0.9% in June from the previous month, versus a 1.3% gain expected by economists in a Reuters poll.

Compared with a year earlier, core machinery orders, a highly volatile data series regarded as a leading indicator of capital spending in the coming six to nine months, grew 6.5%, it showed.

Reflecting corporate resilience, the Reuters Tankan sentiment index for manufacturers rose 4 points to 13 in August and is seen as rising further to 15 over next three months.

The service-sector index rose to 19 from 14 in July and was seen steady in November helped in part by the lifting of coronavirus curbs among industries such as tourism and eateries.

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