Japan’s Exports Jump 18% in Biggest Gain in Almost 4 Years

Japanese exports and imports surged in August, with both beating expectations as a recovery in trade appeared to gain momentum.

-Exports rose 18.1 percent from a year earlier (forecast +14.3%), the biggest increase since November 2013.
-Imports climbed 15.2 percent (forecast +11.6%).
-The trade surplus was 113.6 billion yen ($1.02 billion) (forecast +104.4 billion yen).
-Shipments of autos to the U.S. increased 28.3 percent, though part of the increase in overall shipments to the U.S. can be attributed to lower exports the previous year, according to the Ministry of Finance.
-Shipments of electronic parts to Asia rose 21.6 percent.

Key Takeaways

Japan has enjoyed a run of strong growth in exports this year, while rising imports add to signs that domestic demand is firming as well. The Japanese economy grew at an annualized 2.5 percent in the second quarter, more than double its potential growth rate. But while a weaker yen has improved trade data, inflation remains well below the Bank of Japan’s 2 percent target.

Economist Views

-“In a word, the trade data is strong,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. “Imports are strong, but exports were stronger, and this is definitely a positive reading.”
-“The actual content of the data is better than the headline balance number,” Shinke said. “Autos and semiconductors are leading the export growth.”
-“In the third quarter, we will see a trend reversal in the Japanese economy,” said Hiroaki Muto, chief economist at Tokai Tokyo Research Center. “External demand will be strong and consumption will lack momentum.”

Other Details

-Japan’s adjusted trade balance showed a surplus 367.3 billion yen (forecast +404.5 billion yen), marking 22 months of consecutive surpluses.
-Exports to China, Japan’s largest trading partner, rose 25.8 percent from a year earlier.
-Shipments to the U.S. increased 21.8 percent.
-Those to the EU climbed 13.7 percent.
Source: Bloomberg