–Imports Hit Fresh Record High on High Energy Costs, Leading to 10th Straight Trade Deficit
–Exports to China Mark 2nd Straight Y/Y Drop on Covid Lockdowns
By Max Sato
(MaceNews) – Global reopening demand for iron and steel and semiconductors continued driving Japanese exports to surpass year-earlier levels for the 15th month in a row in May after hitting a record high in March while shipments to China marked the second straight year-on-year drop amid Covid lockdowns in Shanghai and other cities, data released Thursday by the Ministry of Finance showed.
Oil and gas prices remain elevated, boosting imports to yet another record high in May and resulting in the 10th consecutive trade deficit, which ballooned to the second widest on record last month. The depreciation of the yen is also eroding Japan’s purchasing power.
Shanghai lifted a two-month lockdown at the end of May, which is expected to gradually reopen the flow of semiconductors and smartphones to Japan and shipments of Japanese chip-making equipment.
The key points from the MOF’s Trade Statistics:
* Exports rose 15.8% to Y7.25 trillion, the highest amount for May, marking the 15th straight year-on-year rise after rising 12.5% in April and climbing 14.7% to a record high of Y8.46 trillion in March. The pace was slower than the median forecast of a 16.8% gain. Export volumes fell for the third month in a row, down 3.5% after falling 4.4% in April.
* The increase was led by demand for iron and steel, mineral fuels and electronic parts (semiconductors). Exports of semiconductor-producing equipment to the European Union continued surging but those to China remain depressed as the key port city of Shanghai remained closed.
* Shipments of automobiles fell 7.9% (down 16.6% in volumes) on the year in May, as the industry continues to tackle parts shortages and logistics bottlenecks. It followed a 4.8% rise in April, a 5.2% drop in March and an 8.3% rebound in February. Auto exports to the US, the key market, dipped 15.6% (down 30.2% in volumes) after rising 10.9% in April, falling 16.7% in March and rising 16.2% in February.
* On a seasonally adjusted basis, exports rose 2.4% in May from the previous month after rising 1.3% in April. The Bank of Japan’s real export index plunged 6.0% on the month in April after rising 0.6% in March. The BOJ will release its real trade indexes for May at 1400 JST (0500 GMT/0100 EDT) Thursday.
* Imports surged 48.9% on year to a fresh record high of Y9.64 trillion in May, surpassing the previous record of Y8.92 trillion hit in April. It was the 16th straight increase after a revised 28.3% gain the previous month, coming in higher than the median forecast for a 44.3% rise. The increase was led by higher prices for crude oil, coal and natural gas as well as the need to import more Covid vaccines from Europe. Import volumes posted the first rise on the year in four months, up 4.7%, after falling 9.0% in April.
* The trade balance came to a deficit of Y2.38 trillion (Y2,384.7 billion) in May, which was the second largest on record dating to 1979. It marked the 10th straight month of a shortfall after a deficit of Y842.8 billion (revised from Y839.2 billion) the previous month and compared to a deficit of Y212.9 billion in May 2021. The gap was wider than the consensus call of a Y2.07 trillion deficit.
* Exports to China, the top export destination for Japan, posted the second straight drop, down 0.2% from a year earlier in May after falling 5.9% in April, rising 2.9% in March and surging 25.8% in February. The 5.4% decrease in January was the first drop in 19 months and was due to slower shipments before the Lunar New year holidays. The decrease in May was led by automobiles, optical equipment and chip-making equipment. Shipments of audio and visual equipment, non-ferrous metals and plastics showed solid gains.
* Japanese exports to Asia as whole marked the 15th straight year-on-year rise, up 17.5%, after increases of 10.3% in April and 12.4% in March. The increase was led by iron and steel, mineral fuels and electronic parts.
* Exports to the U.S., another key market, recorded the eighth straight year-on-year rise, up 13.6% in May, after rising 17.6% in April and 23.8% in March. The increase was led by mineral fuels, construction machinery and drugs.
* Shipments to the European Union posted the 15th straight year-on-year increase, up 10.6% on year after gaining 19.1% in April and 16.8% in March. Demand for chip-making equipment as well as iron and steel remained strong and the increase was also led by organic compounds.