–Imports Mark 2nd Y/Y Drop in A Row on Easing Energy Prices
–Japan Posts 22nd Straight Monthly Trade Deficit
–Exports to China Mark 6th Straight Y/Y Drop on Iron and Steel
By Max Sato
(MaceNews) – Japanese export values posted a slight gain as recovering supply chains supported automobile shipments to the U.S. and Europe but the pace of increase continued slowing amid cooling global demand for semiconductors, data released Thursday by the Ministry of Finance showed.
Import values fell on the year for the second month in a row after recording their first drop in 27 months in April in light of easing energy and commodities prices from last year’s peaks.
The trade deficit shrank sharply from a year earlier but widened on the month after narrowing for a third straight month in April and 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 sixth straight year-over-year decline in May, led by declines in iron and steel, non-ferrous metals and auto parts, as largely seen in the previous month. The world’s second-largest economy is only 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 0.6% on the year in May for the 27th straight increase after rising 2.6% in April, 4.3% in March, 6.5% in February and following double-digit percentage gains seen last year. It was above the median forecast of a 1.7% drop (forecasts ranged from a 4.8% drop % to a 1.5% gain).
* Amid slowing global economic growth, export volumes fell 6.4% on the year for the eighth straight drop after falling 6.2% in April.
* The slight increase in May export values was led by higher shipments of automobiles, construction and mining machines and optical instruments. Exports of mineral fuels, semiconductor-producing equipment and electronic parts (including semiconductors) declined.
* Import values slumped 9.9% on the year in May after marking their first drop in 27 months with a 2.3% drop in April. It was slightly smaller than the median forecast of a 10.1% decline (forecasts ranged from 14.0% to 7.8% falls). The decrease was led by crude oil, coal and liquefied natural gas as the prices for energy and commodities have eased.
* Import volumes dipped 5.2% on year in May for the seventh straight decrease after sliding 0.4% in April.
* The trade balance came to a deficit of ¥1.37 trillion (¥1,372.5 billion) in May. It marked the 22nd straight month of a shortfall. It is wider than a revised ¥432.3 billion in April, when the deficit shrank to the smallest in over eight years, narrowing from ¥755.1 billion in March, ¥919.9 billion in February and a record high deficit of ¥3,506.4 billion in January. The May deficit was smaller than a deficit of ¥2.37 trillion (¥2,366.1 billion) seen in May 2022. The gap was slightly narrower than the consensus forecast of a ¥1.40 trillion deficit.
* Exports to China, one of the top export destinations for Japanese goods, fell 3.4% on the year in May, after decreases of 2.9% in April, 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 iron and steel, non-ferrous metals and auto parts while exports of automobiles and electronic parts rose. The recent trend is in stark contrast to the middle of last year, when shipments to China rose 12.8% to a record high ¥1.78 trillion in July 2022.
* Japanese exports to Asia as whole dipped 8.1% in May for the fifth straight drop, following decreases of 6.3% in April, 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 decline was led by iron and steel, electronic parts and plastics.
* Exports to the U.S., which have exceeded those to China since October 2022, recorded their 20th straight year-on-year rise, up 9.4% in May, following increases of 10.5% in April, 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, engines and aircraft.
* Shipments to the European Union posted the 27th straight year-on-year increase in May, up 16.6%, following increases of 11.8% in April, 5.1% in March, 18.6% in February and 9.5% in January, led by automobiles, construction and mining equipment and motorcycles.