–Imports Surge on Drugs, Computers, Crude Oil as Relatively Weak Yen Keeps Costs High
–Exports to China Post 8th Straight Y/Y Rise Following Last Year’s Slump
–Exports to US Remain Robust; Those to EU Mark 4th Straight Y/Y Decline
By Max Sato
(MaceNews) –Japanese export values rose 10.3% for the eighth straight year-over-year increase in July, led by solid demand for semiconductors, automobiles and semiconductor-making equipment from the U.S. and Asia, accelerating from a 5.4% gain in June and overcoming continued sluggish shipments of some of those goods to Europe, data released Wednesday by the Ministry of Finance showed.
The pace of export growth came in slower than the consensus forecast of a 12.9% gain but the July amount worth ¥9.62 trillion was the second largest after the record high of ¥9.64 trillion hit in December 2023 and the biggest for the month of July.
Import values surged 16.6%, close to the consensus call of 16.9%, for the fourth straight increase, led by drugs, computers and crude oil, following a 3.2% rise in June, as the relatively weak yen is keeping import costs high.
The trade balance recorded a ¥621.8 billion deficit, much wider that the median forecast of a ¥326.5 billion deficit and beyond the economist forecasts that ranged from ¥567.1 billion to ¥179.5 billion deficits). It followed a revised ¥223.99 billion surplus in June and a ¥1,223.0 billion (¥1.22 trillion) deficit in May, and compared with a ¥36.5 billion surplus in June 2023 and a record shortfall of ¥3,506.43 billion (¥3.51 trillion) hit in January 2023.
Shipments to China, a key export market for Japanese goods, posted their eighth straight increase thanks to demand for semiconductor-making equipment and autos, even as the Japanese government has expressed concerns over the slow progress in China’s recovery from its property market problems. Japanese exports to the European Union fell on year for the fourth straight month, hit by lingering sluggish demand for automobiles and production machinery, although shipments of iron and steel rebounded. Exports to the U.S. remain robust, up for the 34th straight month on autos and auto parts, after hitting a record high amount in December 2023.
Data released last week showed that Japan’s gross domestic product for the April-June quarter posted a stronger-than-expected rebound after suffering its first contraction in two quarters in January-March, up a preliminary 0.8% on quarter, or an annualized 3.1%, as consumption and business investment picked up after having been hit by suspended output at Toyota group factories over a safety test scandal. But the wobbly economic recovery does not warrant a fast pace of policy normalization by the Bank of Japan whose policy rate is still close to zero and keeping monetary conditions accommodative
Other details from the MOF’s Trade Statistics:
Exports to China, one of the top export destinations for Japanese goods, rose 7.2% on year in July for the eighth straight month after rising at the same pace in June. The increase was led by shipments of semiconductor-producing equipment, plastics and scientifical optical equipment, a category that includes film on liquid crystal displays and steppers used for drawing circuit diagrams on computer chips.
Japanese exports to Asia as a whole also rose for the eighth consecutive month, soaring 15.3% to a record high of ¥5.09 trillion, after rising 7.7% in June. The increase was led by high demand for semiconductors, semiconductor-producing equipment and automobiles, as largely seen in recent months.
Exports to the U.S., which have exceeded those to China since October 2022, recorded their 34th straight year-on-year rise, up 7.3% in July after rising 11.0% in June and soaring 20.2% to a record high of ¥2.08 trillion in December 2023. The increase was led by automobiles and auto parts as well as scientifical optical equipment.
Shipments to the European Union slipped 5.3% for the fourth straight year-on-year drop after slumping 13.4% the previous month. The recent decline is partly in reaction to double-digit percentage gains seen a year earlier. The decrease was due to declines in automobiles, construction/mining machinery and chip-producing equipment.