Investing.com-- Japan’s trade balance shrank less than expected in August, although growth in both imports and exports missed expectations amid sluggish demand and disruptions in local output.
The country’s trade balance was a deficit of 695.3 billion yen ($4.93 billion) in August, government data showed on Wednesday. The reading was stronger than expectations for a deficit of 1.380 trillion yen, but widened from the 628.7 billion yen deficit seen in the prior month.
The wider deficit was driven chiefly by a smaller-than-expected increase in exports, which also slowed from the prior month. Exports grew 5.6% year-on-year against expectations of 10%, with growth slowing from the 10.2% rise seen in the prior month.
A stronger yen weighed on exports through August, as a hawkish Bank of Japan and expectations of U.S. interest rate cuts saw the currency come close to 2024 peaks during the month.
Japan's trade deficit was also came amid a substantially smaller-than-expected increase in imports, with growth slowing even as higher wages fueled improved local demand in recent months.
Japanese imports grew 2.3%, a fraction of expectations for a 13.4% rise, and slowing sharply from the 16.6% jump seen in the prior month.
The weak import reading spurred some doubts over just how much local demand was improving on the back of strong wages, especially as the country grappled with an extended deflationary trend over the past two years.