Honda Motor Co. vehicles bound for shipment at a port in Yokohama, Japan, on Thursday, Feb. 6, 2025. In Japan, nominal wages rose at the fastest pace in nearly three decades in December, supporting the Bank of Japan’s latest rate hike decision and keeping the bank on track for further tightening steps. Photographer: Toru Hanai/Bloomberg via Getty Images
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Japan’s exports in May grew at their fastest pace since November 2022, rising 17% year on year, driven by robust demand for cars and semiconductors.
Growth was higher than the 16.2% expected by economists polled by Reuters, and up from the 14.8% in April.
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%.
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.
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.
