Japan: Trade balance swings to a deficit in August
September 21, 2011
In August, exports rose 2.8% over the same month last year (July: -3.4% year-on-year), which represented the first expansion in six months, but undershot market expectations of an 8.0% increase. Meanwhile, imports jumped 19.2% (July: +9.9% yoy), marking the fastest pace since June 2010 and coming in well above the 14.3% rise anticipated by the market. As a result, the trade balance swung to a shortfall of JPY 775 billion (USD 10 billion) in August from a surplus of JPY 70 billion in July. Transport equipment, which accounts for around 20% of total shipments, led the monthly increase and continued to improve compared with the previous month, while exports of electrical machinery fell. On the other hand, mineral fuel imports, which account for around 33.6% of total purchases, climbed 41.9% in August on the back of higher demand from fuel-based power plants attempting to compensate for the loss of nuclear power generation. Meanwhile, exports to China and the United States recovered, while those to the European Union grew at the same pace as in July. A monthly analysis partially corroborates the improvement seen in annual figures, with exports expanding a seasonally adjusted 0.3% over the previous month, which was, nevertheless, below the 0.7% increase in July. Imports expanded 2.7% over the previous month, markedly improving from July's 0.4% contraction. The August data confirm that most of the sectors severely affected by the 11 March disasters have already recovered, but slowing global demand and a strong yen may cloud the outlook for the export-driven economy going forward.