Japan's export growth in September significantly underperformed expectations, rising 16.7% year-over-year compared to the 20.1% forecast by Reuters-polled analysts. This marks the second consecutive month of slowing shipment growth after Japan experienced a near four-year high in exports during July. The weaker performance was despite strong gains in semiconductor exports, which grew 49.4% by value, alongside rises in machinery exports, including semiconductor-related machinery up 43.9% and power generation machinery up 22.6%.

Trade with key partners showed mixed results. Exports to mainland China, Japan’s largest trading partner, increased 8.6%, while shipments to the United States rose 22.9%. These exports have been a major factor driving Japan’s economic growth in the first two quarters of 2026, helping the country exceed growth expectations in the first quarter and maintaining momentum in the second.

On the imports side, Japan saw an 18.9% rise in September, also falling short of the 19.6% forecast. Notably, petroleum imports climbed 51.1% in value, with shipments from the U.S. surging nearly 820%, reflecting shifting supply dynamics. In contrast, imports from the Middle East rose only 1.5%, hindered by ongoing conflicts affecting supplies from the region.

Following the release of these trade figures, Japan’s Nikkei 225 index rose 1.8%, while the broader Topix index advanced 1.14%. This data comes ahead of the Bank of Japan’s scheduled meeting next week, where analysts expect the central bank to maintain its policy rate at 1%, as indicated by a recent Reuters poll. The trade slowdown illustrates growing challenges despite the country’s sustained semiconductor and machinery export strength.