Japan prepares stimulus as exports weaken

Japan is preparing another round of fiscal stimulus. AFP/CNA reports:

Japan's Prime Minister Naoto Kan Monday ordered a supplementary budget for fresh stimulus measures be put together to shore up the flagging economy, a senior official said.

Democratic Party of Japan secretary general Katsuya Okada suggested the measures would be similar to those proposed by rival parties, indicating that the budget may land somewhere between 4-5 trillion yen (47-59 billion US dollars).

This comes as a report on Monday showed Japanese exports deteriorating in August. From Bloomberg:

Japan’s exports grew at the slowest pace this year in August as a decrease in global demand and an advance in the yen threaten to undermine the nation’s recovery.

Overseas shipments increased 15.8 percent from a year earlier, the slowest since December, the Finance Ministry said in Tokyo today. The median estimate of 21 economists surveyed by Bloomberg News was for a 19 percent increase...

From a month earlier, exports fell 2.3 percent, today’s report showed. Imports climbed 17.9 percent in August from a year earlier. The trade surplus fell for the first time in 15 months to 103 billion yen ($1.2 billion).

It doesn't help Japan that the US economy also appears to be slowing. The Chicago Fed reported on Monday that national economic activity weakened in August.

Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index decreased to –0.53 in August from –0.11 in July. None of the four broad categories of indicators that make up the index made a positive contribution in August.

The index’s three-month moving average, CFNAI-MA3, declined to –0.42 in August from –0.27 in July. August’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.