By Max Sato
(MaceNews) – Japanese exports took one step back from the recent pickup trend and posted an unexpected fall in November, remaining below year-earlier levels for two years as the global economy faces pandemic-caused uncertainty, data released Wednesday by the Ministry of Finance showed.
The outlook for domestic growth and a return to mild inflation remains “extremely unclear,” as the Bank of Japan has put it, in the face of renewed spikes in coronavirus infections, which are prompting lockdowns and tougher restrictions on economic activity in many parts of the world.
The Japanese government will release its monthly economic report on Dec. 22, in which it is expected to maintain its overall assessment that the economy is “showing signs of a pickup.” Economic ministers will discuss whether they can still say exports are picking up after today’s data.
The key points from the MOF’s Trade Statistics:
* Exports slumped 4.2% on year in November, coming in much weaker than the median forecast by economists polled by Reuters of a 0.5% increase. It was the 24th straight y/y drop after a 0.2% fall in October and double-digit percentage drops in recent months. The decline was led by sharp decreases in mineral fuels as well as iron and steel and a slight fall in automobiles. “Exports of the first 20 days of November rose 1.1% form a year earlier, but the whole-month made a sharp contrast of a 4.2% drop,” said Sumitomo Mitsui DS Asset Management chief economist Akiyoshi Takumori. “It may be because diesel oil shipments to Europe dropped due to lockdowns. It may be also due to a calendar factor that the Labor Thanksgiving Day (Nov. 23) fell on a Monday this year, instead of a Saturday last year, leading to shorter export days.”
* Economists estimate that the month-to-month change in real exports – a key indicator for the recent trend – might have posted the first month-on-month decline in five months on a seasonally adjusted basis. The Bank of Japan’s seasonally adjusted real export index rose 4.5% on quarter in October. (BOJ’s November trade data are due at 1400 JST/0000 EST Wednesday).
* The MOF said exports slipped a seasonally adjusted 0.3% on month in November and imports dipped 4.0%, resulting in a trade surplus of Y570.2 billion.
* Imports fell 11.1% y/y for the 19th consecutive decrease mainly due to lower prices for oil and gas, compared to year-earlier levels. The pace of decline continued decelerating from -13.3% in October and -17.4% in September. The median forecast was for -10.5%. Imports of telecom equipment (smartphones) jumped 45.8% y/y last month.
* The trade balance came to a surplus of Y366.8 billion in November, posting the fifth straight monthly positive figure, after a surplus of Y871.7 billion the previous month. The gap was narrower than the median economist forecast of a Y529.8 billion surplus.
* Exports to China rose 3.8% from a year earlier in November for the fifth consecutive y/y rise, but the pace of increase decelerated from +10.2% in October. The increase was led by strong demand for non-ferrous metals, automobiles and plastics while shipments of organic compounds (cosmetics) and semiconductors saw sharp drops.
* Japanese exports to Asia as whole suffered the first year-on-year fall in two months, down 4.3% in November, after rising 4.4% the previous month. The decrease was due to lower shipments of mineral fuels and iron and steel products.
* Exports to the U.S., another key market for Japan, also took a hit last month, posting the first drop in three months, down 2.5% on year, giving back the 2.5% gain in October. The decline was led by aircraft – this category tends to fluctuate widely – medicine and computer parts. Exports of automobiles and construction machinery remained strong in light of U.S. economic recovery.
* The global pandemic continued clouding the prospects for demand from Europe. Japanese exports to the EU slipped 2.6% y/y for the 16th consecutive decrease after falling at the same pace in October and marking double-digit percentage declines in prior months. The decrease was led by slower shipments of automobiles and engines while exports of construction machinery and organic compounds posted sharp gains.
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Contact this reporter: max@macenews.com.
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