By Tetsushi Kajimoto and Daniel Leussink
TOKYO (Reuters) - Japan's exports fell for a sixth straight month in May as China-bound shipments of semiconductor manufacturing equipment and car parts weakened, in a sign of a deteriorating outlook for growth as the trade-reliant economy faces persistent pressure from slowing external demand.
Sluggish exports have been a source of concern among Japanese policymakers, especially as a bruising U.S.-China tariff war has upended supply chains and hit global growth, trade and investment.
"The business sentiment of Japanese firms, and in particular exporters, is falling depending on the extent of U.S.-China trade tensions, and that will suppress exporters' capital expenditure," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
"I think that will be a negative for Japan's economy."
Ministry of Finance (MOF) data showed on Wednesday that exports declined 7.8% in May from a year earlier, down for the sixth straight month.
The fall in shipments compared with a 7.7% annual decrease expected by economists in a Reuters poll, and followed a 2.4% year-on-year fall in April.
The trade data comes on the heels of a Reuters poll of Japanese companies showing the economy is likely to stop expanding this year and into next as the Sino-U.S. trade war and a planned sales tax hike are expected to crimp activity.
"Although export volumes are unlikely to be as weak as they were in the last quarter, a likely rebound in import volumes means that net trade should turn into a drag on GDP (gross domestic product) growth in Q2," said Darren Aw, Asia economist at Capital Economics in Singapore.
Indeed, Japan's first quarter GDP growth was partly boosted by a statistical quirk of imports falling more than exports, meaning overall trade provided a boost to the economy even as the underlying picture showed weakness.
Earlier this month, Group of 20 finance leaders warned that intensifying trade and geopolitical tensions raised risks to global growth, but they stopped short of calling for a resolution of the deepening U.S.-China trade conflict.
The slowdown in exports in May was also likely caused by suspension of factory activity due to the 10-day break as the Golden Week holiday was extended this year to mark the enthronement of a new emperor, analysts say.
Overall, however, weak global demand poses risks for the world's third-biggest economy, and faltering earnings at Japan Inc. suggests little respite in the months ahead especially if domestic demand fails to offset frail exports.