Japan’s Trade Recovery Powers Ahead With Strong September Growth

Japanese exports grew by double digits for a third straight month in September, as a trade recovery underway this year showed no signs of letting up.

-Exports rose 14.1 percent from a year earlier (forecast +15%).
-Imports increased 12 percent (forecast +14.7%).
-The trade surplus was 670.2 billion yen ($5.9 billion) (forecast +556.8 billion yen).
-Exports of motors were a big contributor, rising 19.6 percent on demand for rail car engines.
-Shipments of semiconductors and electronic parts rose 12.3 percent.

Key Takeaways

Recovering global demand has driven growth in Japan’s exports, supporting the nation’s domestic economy. But Japan’s trade surplus with the U.S. continues to irritate the Trump administration. In a report on foreign-exchange policies released on Oct. 17, the U.S. Treasury kept Japan on its monitoring list due in part to its goods surplus with the U.S., which Treasury said was $69 billion over the four quarters through June. At the U.S.-Japan bilateral economic talks earlier this week, U.S. Vice President Mike Pence showed great interest in a trade deal with Japan, but currency was not discussed, according to a Japanese official.

Economist Views

-“The pace of growth isn’t speeding up, but the global economy’s doing well so it’s not surprising that Japan’s exports are increasing,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
-“Export growth is in the double digits, and volume is also growing at around 5 percent, so trade is healthy,” said Toru Suehiro, senior market economist at Mizuho Securities Co. “I’m not too concerned about the U.S. going forward, but it’s difficult to see exports to China growing at the current pace for too long.”
-“Exports of machines that reflect the Chinese economy’s strength, and electronic parts that reflect Asia’s, are continuing to show strong demand,” Suehiro said.

Other Details

-Japan’s adjusted trade balance showed a surplus of 240.3 billion yen (forecast 309.2 billion yen).
-Exports to China, Japan’s largest trading partner, rose 29.3 percent from a year earlier.
-Those to the U.S. rose 11.1 percent.
-Shipments to the EU climbed 11.5 percent.
-Although the value of imports rose, the volume slipped 0.3 percent.
Source: Bloomberg