Japan's Exports Surge 17% in May, Driven by Cars and Semiconductors

Japan's exports in May grew at their fastest pace since November 2022, rising 17% year on year, beating expectations, driven by robust demand for cars and semiconductors.

The figure was higher than the 16.2% expected by economists polled by Reuters, and up from the 14.8% in April.

The country's exports of semiconductors surged 61.2% in May from a year earlier in terms of value, powered by booming demand for artificial intelligence technology, while shipments of cars jumped 16.4%, according to the official data.

The surge in exports was powered by a 17.9% year-on-year jump in shipments to China and a 12.5% surge in exports to the U.S. Beijing is Tokyo's largest trading partner, while Washington is its second-largest.

Exports to the Middle East took a hit due to the U.S.-Iran war, falling 32%.

Japan's imports rose 12.5% year on year in May, the highest growth since January 2025, but missing Reuters poll estimates of 12.8%.

Exports remain one of Japan's main economic drivers, with its economy growing 0.5% sequentially in the first quarter and at 1.8% on an annualized basis.

The economic data comes after the Bank of Japan raised its policy rate on Tuesday by 25 basis points to the highest in over 30 years at 1%, as the country sees rising inflation and the yen stays weak.

A weak yen is likely to boost exports but also causes domestic worries by pushing up imported inflation and weakening purchasing power.

Japan's benchmark Nikkei 225 index was down 0.5%, while the yen was little changed following the data release, trading at 160.4 against the U.S. dollar.

The Reuters Tankan survey — which measures business sentiment among large Japanese manufacturers and is closely watched by the central bank — climbed to +13 in June, the highest in three months, from +8 in May. The non-manufacturing index rose to +32. A positive figure indicates that optimists outnumber pessimists.