–Japan Posts 21st Straight Monthly Trade Deficit but Smallest Since February 2015
–Exports to China Mark 5th Straight Y/Y Drop but at Slower Pace; Economy Recovering from Beijing’s Zero-Covid Policy Impact
By Max Sato
(MaceNews) – The year-over-year increase in Japanese export values slowed further in April amid softer global demand despite solid shipments of automobiles on improving supply chains, data released Thursday by the Ministry of Finance showed.
Import values posted their first drop in 27 months as energy and commodities prices have eased after last year’s spike, leading to a narrower trade deficit for a third straight month after hitting a record shortfall in January, a month when trade flows tend to be irregular around the lunar new year holidays in some parts of Asia.
Shipments to China, the key export market for Japanese goods, posted their fifth straight year-over-year decline in April, led by declines in autos and auto parts as well as iron and steel, as seen in the previous month. The world’s second-largest economy is gradually recovering from the sluggish activity caused by Beijing’s strict zero-Covid policy.
The key points from the MOF’s Trade Statistics:
* Export values rose 2.6% on the year in March for the 26th straight rise, with the pace of increase decelerating from 4.3% in March, 6.5% in February and 3.5% in January and following double-digit percentage gains in the prior months. It was lower than the median forecast of a 3.0% rise (forecasts ranged from a 0.9% drop % to 4.0% rise).
* Amid slowing global economic growth, export volumes fell 6.2% on the year for the seventh straight drop after falling 8.1% in March.
* The increase in April export values was led by the recent pickup in automobile shipments, thanks to easing global supply constraints, in addition to higher demand for optical equipment and ships. Exports of plastics, semiconductor-producing equipment and mineral fuels dropped.
* Import values fell 2.3% on the year in April for their first drop in 27 months, coming in weaker than the median forecast of a 0.5% decline. It followed increases of 7.3% in March, 8.5% in February and 17.6% in January. The decrease was led by crude oil, liquefied natural gas and non-ferrous metals, as the prices for energy and commodities have eased.
* Import volumes fell 0.4% on year in April for the sixth straight decrease after dipping 2.6% in March.
* The trade balance came to a deficit of ¥432.4 billion in April. It marked the 21st straight month of a shortfall, narrowing further from a revised deficit of ¥755.1 billion, ¥919.9 billion in February and a record high deficit of ¥3,506.4 billion in January, and compared to a deficit of ¥854.9 billion in April 2022. The gap was much narrower than the consensus forecast of a ¥670.0 billion deficit. It was the smallest since ¥426.0 billion seen in February 2015.
* Exports to China, one of the top export destinations for Japanese goods, fell 2.9% on the year in April, with the pace of decline decelerated further from 7.7% in March, 10.9% in February, 17.1% in January and posting their first drop in seven months in December with a 6.2% drop. The decrease was led by automobiles, auto parts and iron and steel, as seen in March, while exports of semiconductor-producing equipment and organic compounds (cosmetics, soap) rose. Shipments to China rose 12.8% to a record high ¥1.78 trillion in July 2022.
* Japanese exports to Asia as whole dipped 6.3% in April for the fourth straight drop, with the pace of decline faster than 1.1% in March and 1.3% in February and marking their first year-on-year drop in 23 months in January, down 4.0%. The decrease was led by plastics, mineral fuels and non-ferrous metals amid easing of some commodities prices.
* Exports to the U.S., which have exceeded those to China since October 2022, recorded their 19th straight year-on-year rise, up 10.5% in April, following increases of 9.4% in March and 14.9% in February and a 36.5% surge to a record high of ¥1.78 trillion in October 2022. The increase was led by automobiles, construction and mining equipment, and drugs, as largely seen previously.
* Shipments to the European Union posted the 26th straight year-on-year increase in April, up 11.7%, following increases of 5.1% in March, 18.6% in February and 9.5% in January, led by automobiles, ships and optical equipment.