–Exports to U.S., Asia, China All Hit Highest Values on Semiconductors
–Overall Export Volumes Continue to Drop Y/Y After Recovering from Covid Slump
By Max Sato
(MaceNews) – Japanese exports maintained a high pace of growth from a year earlier in July, hitting a record high value for the second straight month on solid global demand for semiconductor-producing equipment and electronic parts amid elevated producer costs, data released Wednesday by the Ministry of Finance showed.
At the same time, export volumes marked the fifth straight year-on-year decline as the outlook for global economic growth remains uncertain over whether aggressive interest rate hikes by major central banks can ease inflationary pressures without causing a slump.
Exports to the U.S., Asia and China all hit record-high values. Shipments to China picked up for the second 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 elevated compared to year-earlier levels, boosting imports to a yet another record high in July and resulting in the 12th consecutive trade deficit. The weak yen is adding to rising import costs.
The key points from the MOF’s Trade Statistics:
* Exports jumped 19.0% to a record high of Y8.75 trillion in July for the 17th straight year-on-year rise, surpassing the previous record of a revised Y8.61 trillion in June, when shipments to the world surged 19.3%. The pace of growth was faster than the median forecast of a 17.0% gain. Export volumes fell for the fifth month in a row, down 2.0% on the year after falling 1.4% in June.
* The increase in July was led by a pickup in automobile shipments and strong demand for mineral fuels and semiconductor-producing equipment.
* High export values reflect rising product prices and transportation costs. The recent decline in export volumes appears to stem from both slowing global demand and remaining supply constraints. The government sees the trend of exports “largely flat” after they had recovered from a Covid-triggered slump.
* Shipments of automobiles rose 13.7% (down 5.3% in volumes) on the year in July following a 0.4% rise in June (down 10.1% in volumes) while the auto industry continues to cope with parts shortages and logistics bottlenecks. Auto exports to the US, the key market, rose 8.4% (down 15.0% in volumes) after dipping 0.7% in June (down 17.5% in volumes).
* On a seasonally adjusted basis, exports rose 2.1% in July from the previous month after rising 4.0% in June. The Bank of Japan’s real export index rose 0.9% on the month in June after rebounding 2.7% in May but fell 3.2% in the April-June quarter from the previous three-month period, when the index rose 2.3%. The BOJ will release its real trade indexes for July at 1400 JST (0500 GMT/0100 EDT) Wednesday.
* Imports soared 47.2% on the year to Y10.19 trillion in July, marking a record high for the fifth consecutive month after rising 46.1% to Y10.01 trillion in June. It was the 18th straight increase and came in line with the median forecast for a 47.2% rise. The increase was led by higher prices for crude oil, coal and natural gas as seen in recent months. The import value of drugs fell on the year (the volumes were still up) as the government had focused on purchasing Covid vaccines from Europe earlier this year. Import volumes posted the third straight rise, up 2.3%, after rising 3.6% in June.
* The trade balance came to a deficit of Y1.437 trillion in July. It marked the 12th straight month of a shortfall after a deficit of a revised Y1.398 trillion the previous month and compared to a surplus of Y434.5 billion in July 2021. The gap was narrower than the consensus call of a Y1.492 trillion deficit.
* Exports to China, the top export destination for Japan, posted the second straight increase, rising 12.8% from a year earlier to a record high Y1.78 trillion
in July, after rising 7.4% in June and falling 0.2% in May and 5.9% in April. The increase was led by shipments of semiconductors, audio and visual equipment and mineral fuels, as seen in June. Imports from China surged 34.6%, also hitting an all-time high of Y2.21 trillion, thanks to solid demand for computers, clothing and smartphones.
* Japanese exports to Asia as whole also hit a record high of Y5.1 trillion in July, marking the 17th straight year-on-year rise, up 21.1%, after increases of 19.1% in June and 17.5% in May. The sharp increase was led by demand for mineral fuels, semiconductors and other electronic parts as well as chip-making equipment. Imports from Asia also jumped 38.5% to a record high of Y4.7 trillion, led by LNG, semiconductors and coal.
* Exports to the U.S., another key market, recorded the 10th straight year-on-year rise, up 13.8% in July, after rising 15.7% in June. The amount, Y1.58 trillion, was the highest on record dating to 1979. The increase was led by automobiles, chip-making equipment and construction/mining machines. Imports from the U.S. also reached a record high in July, up 46.9% at Y1.06 trillion as the prices for LNG and coal remained high.
* Shipments to the European Union posted the 17th straight year-on-year increase, surging 31.6% on year after gaining 22.1% in June, led by automobiles and chip-making equipment.