Japan’s exports rose 17.0% yoy in May, accelerating from 14.8% yoy and exceeding expectations of 16.2% yoy, marking a ninth consecutive month of growth. Strong demand for semiconductors and electronic components linked to the global artificial intelligence boom helped offset disruptions caused by the US-Israeli conflict with Iran and the temporary closure of the Strait of Hormuz. Exports to the United States increased 12.5% yoy, while shipments to China rose 17.9% yoy.
However, the headline strength masked a much softer picture underneath. Export volumes rose just 0.5% yoy, suggesting much of the increase was driven by higher prices rather than stronger underlying demand. A weaker Yen and elevated commodity prices boosted the value of both exports and imports. Electronic components remained a bright spot as demand from AI and data-center investment continued to support pricing for memory chips and non-ferrous metals.
Imports rose 12.5% yoy, slightly below expectations of 12.8% yoy. Despite a collapse in crude oil import volumes, higher energy prices kept import values elevated. Crude oil imports fell -57.3% in volume terms and -28.5% in value terms, while the per-unit cost in Yen reached a record high. Imports from the Middle East plunged -61.9%, partially offset by a 24.0% increase in imports from the United States
Japan recorded a trade deficit of JPY 378.7bn, narrower than the expected JPY 564.6bn shortfall. The data suggest Japan’s trade sector remains resilient, but much of that resilience continues to rely on favorable pricing effects and AI-related demand rather than broad-based growth in export volumes.
| Indicator | Apr | May | Expected |
|---|---|---|---|
| Exports Y/Y | 14.8% | 17.0% | 16.2% |
| Imports Y/Y | 9.8% | 12.5% | 12.8% |
| Trade Balance | JPY 301.9B | -JPY 378.7B | -JPY 564.6B |
