–Imports Hit Fresh Record High on Energy, Leading to Highest Trade Deficit
By Max Sato
(MaceNews) – Japanese exports posted a higher year-on-year rise in August after hitting a record high value in July on global reopening demand for automobiles, fuels and semiconductor-producing equipment and their rising prices, data released Thursday by the Ministry of Finance showed.
But the data continued to indicate slower global growth, with export volumes marking a slight but sixth straight year-on-year decline, amid the race among major central banks, except for Japan’s, to jack up interest rates in a desperate bid to rein in inflation.
Shipments to China, the top export market, picked up for the third consecutive month after a two-month Covid lockdown of the key port city of Shanghai was lifted at the end of May.
Oil and gas prices remain high, boosting imports to a yet another record high in August and resulting in the 13th consecutive trade deficit, which also reached the highest on record dating to 1979. The yen’s depreciation is adding to rising import costs.
The key points from the MOF’s Trade Statistics:
* Exports rose 22.1% to Y8.06 trillion in August for the 18th straight year-on-year rise after rising 19.0% in July to a record high of a revised Y8.76 trillion. The pace of growth was slower than the median forecast of a 23.7% gain. Export volumes fell for the sixth month in a row, down 1.2% on the year after falling 2.0% in July.
* The increase in August was led by a continued pickup in automobile shipments, thanks to somewhat easing supply constraints, and strong demand for mineral fuels and semiconductor-producing equipment, as seen in the previous month.
* High export values reflect rising product and transportation costs. The recent decline in export volumes appears to stem from both slowing global demand and lingering supply bottlenecks. The government sees the trend of exports “largely flat” after they had recovered from a Covid-triggered slump.
* Shipments of automobiles rose 39.3% (up 8.8% in volumes) on the year in August following a 13.7% rise in July (down 5.3% in volumes). The auto industry has been trying to bypass parts shortages and logistical bottlenecks. Auto exports to the U.S., the key market, rose 34.6% (up 13.4% in volumes) after rising 8.4% (down 15.0% in volumes) the previous month.
* On a seasonally adjust basis, exports fell 0.7% in August from the previous month after rising 2.1% in July. The Bank of Japan’s real export index rose 1.7% on the month in July after rising 0.8% in June and rebounding 2.7% in May. The BOJ will release its real trade indexes for August at 1400 JST (0500 GMT/0100 EDT) Thursday.
* Imports soared 49.9% on the year to Y10.88 trillion in August, marking a record high for the sixth consecutive month after rising to Y10.19 trillion in July. It was the 19th straight increase and came in above the median forecast for a 47.0% rise. Import volumes posted the fourth straight rise, up 2.8%, after rising 2.3% in July
* The increase in imports was led by higher prices for crude oil, coal and natural gas as seen in recent months. The import of drugs rebounded on the year as the government still needs to buy more Covid vaccines to provide booster shots amid Japan’s seventh wave of the pandemic.
* The trade balance came to a record high deficit of Y2.817 trillion in August. It marked the 13th straight month of a shortfall after a deficit of a revised Y1.434 trillion the previous month and compared to a deficit of Y653.4 billion in August 2021. The gap was wider than the consensus forecast of a Y2.476 trillion deficit.
* Exports to China, the top export destination for Japan, posted the third straight increase, up 13.5% from a year earlier, after rising 12.8% to a record high Y1.78 trillion in July, rebounding 7.4% in June and falling 0.2% in May and 5.9% in April. The increase was led by demand for automobiles, audio and visual equipment as well as mineral fuels. Imports from China maintained a high 34.2% increase, led by clothing, smartphones and TVs, following a 34.6% jump to an all-time high of Y2.21 trillion in July.
* Japanese exports to Asia as whole marked the 18th straight year-on-year rise, up 18.2%, after rising 21.1% to a record high of Y5.1 trillion in July. The increase was led by demand for mineral fuels, automobiles and chip-making equipment, largely as seen in the previous month. Imports from Asia also jumped 42.1% to a fresh record high of Y4.8 trillion in August on semiconductors, clothing and coal, surpassing the previous record of Y4.7 trillion hit in July.
* Exports to the U.S., another key market, recorded the 11th straight year-on-year rise, surging 33.8% in August, after rising 14.1% to a record Y1.58 trillion in July. The increase was led by automobiles, auto parts and chip-making equipment. Imports from the U.S. reached a fresh high in August on drugs and crude oil, rising 40.5% to Y1.07 trillion, exceeding the previous high of Y1.06 trillion hit in July.
* Shipments to the European Union posted the 18th straight year-on-year increase, up 16.7% in August, after surging 31.6% in July. Japanese exports of automobiles and construction machines rose while those of iron and steel declined.