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Japan runs biggest trade deficit in more than 8 years in May

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© Reuters. FILE PHOTO: Shipping containers are seen at a port in Tokyo, Japan, March 22, 2017. REUTERS/Issei Kato

By Daniel Leussink

TOKYO (Reuters) -Japan ran its biggest single-month trade deficit in more than eight years in May as high commodity prices and declines in the yen swelled imports, clouding the country’s economic outlook.

The growing trade deficit underscores the headwinds the world’s third-largest economy faces from a slide in the yen and surging costs of fuel and raw materials, on which domestic manufacturers rely for production.

Imports soared 48.9% in the year to May, Ministry of Finance data showed on Thursday, above a median market forecast for a 43.6% gain in a Reuters poll.

That outpaced a 15.8% year-on-year rise in exports in the same month, resulting in a 2.385 trillion yen ($17.80 billion) trade deficit, the largest shortfall in a single month since January 2014.

“The weak yen is a major factor behind the rise in imports,” said Harumi Taguchi, principal economist at S&P Global (NYSE:SPGI) Market Intelligence.

“But there’ll be a lag before it benefits exports,” she said, adding that U.S.- and China-bound shipments faced parts supply constraints and China’s strict coronavirus lockdowns.

May’s deficit, which was the second largest in a single month on record, marked the 10th straight month of year-on-year shortfalls and was bigger than the 2.023 trillion yen gap expected in a Reuters poll.

By region, exports to China, Japan’s largest trading partner, shrank 0.2% in the 12 months to May on weaker shipments of machinery and transport equipment to the country.

Shipments bound for the United States, the world’s largest economy, rose 13.6% in May, thanks to stronger exports of machinery and mineral fuels, though those of motor vehicles fell.

“It’s hard to expect a large rise in exports even if the weak yen is bringing some benefits, so exports are unlikely to bring down the trade deficit,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.

Overall imports were pushed up strongly by larger shipments of oil from the United Arab Emirates and coal and liquefied natural gas from Australia, the data showed.

Although Japan’s economy is expected to grow an annualised 4.1% this quarter as the coronavirus pandemic fades, a slide in the yen is threatening to hurt consumer sentiment as higher fuel and food costs inflict pain on households.

Nearly half of Japanese companies see a weak yen as bad for their business, a private survey showed this week, suggesting the currency’s declines are hurting business sentiment.

($1 = 133.9800 yen)

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Peru truckers, farmers to strike over fuel and fertilizer costs

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© Reuters. FILE PHOTO: People walk next to parked trucks during a national transportation strike against fuel prices, in Lima, Peru March 18, 2021. REUTERS/Angela Ponce/File Photo

By Marco Aquino

LIMA (Reuters) – Peru’s truckers and some farm groups will go on strike on Monday after failing to reach agreements with the government seeking measures to reduce the impact of steep global price rises of fuel and fertilizer, sector leaders said on Sunday.

Union leaders met on Friday and Saturday with government representatives, with demands including considering freight transport a “public service” that would reduce costs and curb competition from truckers from neighbor countries.

“We are firm in plans to strike with all our bases nationwide,” the leader of the heavy load haulage and drivers union Marlon Milla told radio station RPP. The union has 400,000 cargo transport units in 14 of the 25 regions of the country.

High global fuel prices linked to Russia’s invasion of Ukraine have stoked unrest in Peru, the world’s No. 2 copper producer, while shortages of fertilizer have raised fears over food supply with the government struggling to secure shipments.

The government of leftist President Pedro Castillo, who has seen his popularity tumble since taking office last year, has taken measures to curb the rising cost of living, but the annual inflation rate remains at around 8%, its highest level in 24 years.

Some farming unions also announced strikes on Monday, in protest at the rise in fertilizer prices and shortages.

Latin American leaders are grappling to bring down spiraling prices despite major interest rate hikes. Trucking protests over fuel costs have hit Argentina while Ecuador is being roiled by protests in part linked to gas prices. [L4N2YB27W]

“The dialogue has not been exhausted, we are in a permanent session of ministers to avoid protest,” Justice Minister Félix Chero told reporters on Sunday. The government is offering subsidies for road tolls and fertilizer costs.

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French lawmakers plan $8.4 billion aid for households to fight inflation

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© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7, 2022. REUTERS/Eric Gaillard

PARIS (Reuters) – French lawmakers are drafting a bill to shore-up household buying power by raising some forms of government assistance by 4%, at a cost of 8 billion euros ($8.44 billion) from July to April next year, business daily Les Echos reported on Sunday.

According to the report, the planned increases would apply to welfare benefits for families, unemployed workers and disabled people as well as pension payouts, effective in July.

Housing allowances, meanwhile, could be increased by around 3.5% starting in July as part of a separate bill.

France’s central bank forecast this month that French inflation would average 5.6% this year before falling to 3.4% in 2023 and easing to just below the European Central Bank’s 2% target in 2024.

($1 = 0.9475 euros)

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Israel to let more Palestinians work in manufacturing to fill labour shortage

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© Reuters. FILE PHOTO: A Palestinian worker holds up his ID card as he is processed after entering Israel through the Erez Crossing, on the border with Gaza, February 20, 2022. REUTERS/Amir Cohen

By Steven Scheer

JERUSALEM (Reuters) – Israel’s cabinet approved issuing 3,500 additional permits for Palestinian workers in Israel’s manufacturing and services sectors, increasing the number to 12,000 to help relieve a shortage of skilled staff, the Economy Ministry said on Sunday.

Workers from the West Bank and Gaza Strip, territories which Israel captured in the 1967 Middle East War, require permits to cross checkpoints and enter Israel where wages are higher.

Israel employs nearly 100,000 West Bank and Gaza Palestinian workers, according to the Israeli Population and Immigration Authority. But most work in construction or agriculture, with only a comparatively small number given permits for jobs in factories or the services sector.

Israel’s jobless rate is around 3%, and the economy ministry said the existence of 14,000 vacancies in manufacturing was creating a barrier to economic growth.

Economy Minister Orna Barbivai said in a statement that in addition to the extra work permits for Palestinians, the ministry plans to work to increase manufacturing productivity through automation and digitalisation.

The quota for Palestinian workers in manufacturing will automatically be reduced if the annual average unemployment rate in Israel rises above 7.5%, the government said.

Ron Tomer, head of Israel’s Manufacturers’ Association, called the decision to boost numbers of Palestinians allowed to work in Israel a “lifeline” for the industrial sector given severe shortages of workers.

“There are currently thousands of open jobs that manufacturers find difficult to fill, and we believe that increasing the quota will help reduce the severe shortage at least in the short and medium term and help the industry continue to operate and grow in Israel,” he said.

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