By Max Sato
(MaceNews) – Japanese exports stayed on course toward gradual recovery in October, marking a much smaller year-on-year drop than expected, thanks to solid demand for automobiles and semiconductor-making equipment, trade data released Wednesday by the Ministry of Finance showed.
But both economists and Japanese policymakers warn that the outlook for external demand remains uncertain as a third wave of coronavirus infections is prompting some countries and cities to impose stricter restrictions on economic activity.
The key points:
* Exports dipped just 0.2% on year in October, coming in firmer than the median forecast by economists polled by Reuters of a 4.5% decrease. It was the 23rd straight y/y drop, hit by slow demand for mineral fuels, ships and iron and steel products, as seen in recent months, but the pace of decrease decelerated further from -4.9% in September, -14.8% in August and -19.2% in July.
* The MOF said exports rose a seasonally adjusted 2.6% on month in October and imports gained 5.1%, resulting in a trade deficit of Y314.3 billion.
* Economists estimate that the month-to-month change in real exports – a key indicator for the recent trend – posted a fourth straight month of increase on a seasonally adjusted basis. The Bank of Japan’s seasonally adjusted real export index rose 13.3% on quarter in July-September for the first gain in four quarters after -18.4% in the previous three-month period. (BoJ’s October data are due at 1400 JST/0000 EST Wednesday).
* Net exports – exports minus imports – as well as private consumption led a rebound in Japan’s gross domestic product in the July-September quarter, which surged 5.0% on quarter, or an annualized 21.4%, and recovered about half of a record contraction of 8.2% q/q, or an annualized 28.8%, in April-June, according to Cabinet Office data released Monday.
* Imports fell 13.3% y/y for the 18th consecutive decrease mainly due to lower prices for oil and gas, compared to year-earlier levels, as well as slower demand for aircraft, the MOF data showed. The pace of decline continued decelerating from -17.4% in September and -20.7% in August, but the decrease was larger than the median forecast of -9.0%.
* The trade balance came to a surplus of Y872.9 billion in October, posting the fourth straight monthly positive figure, after a surplus of Y687.8 billion the previous month. The gap was much wider than the median economist forecast of a Y250 billion surplus.
* Exports to China rose 10.2% from a year earlier in October after a 14.0% rise in September for the fourth monthly rise in a row, backed by solid demand for semiconductor-making machines, automobiles and plastics. Shipments of organic compounds (cosmetics) and electronic parts fell, however.
* Japanese exports to Asia as whole also showed signs of a pickup, posting the first year-on-year gain in eight months, up 4.4% in October, after slipping 2.0% the previous month. The rebound was led by demand for non-ferrous metals, plastics and chip-making equipment, although shipments of steel products and organic compounds (cosmetics) continued to decline.
* Exports to the U.S. gained momentum, up 2.5% in October for the second y/y gain in a row after +0.6% in September, which was the first increase in 14 months. The increase was led by automobiles, auto parts and heavy electrical machinery (turbines, etc.), as seen in the previous month.
* By contrast, exports to the EU fell 2.6% y/y for the 15th consecutive decrease, but the pace of decline continued decelerating from -10.6% in September and -19.2% in August. The decrease was led by slower shipments of automobiles, metalworking machines and engines.
—
Contact this reporter: max7sato@gmail.com
Content may appear first or exclusively on the Mace News premium service. For real-time email delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.