Japan: Trade balance swings to positive as industry recovers from quake damages
July 21, 2011
In June, Japan recorded its first trade surplus in three months, confirming that the world's third-largest economy is recovering from the 11 March disaster, as supply-chain constraints and production disruptions begin to ease. Exports fell 1.6% over the same month last year (May: -10.3% year-on-year), which came in above market expectations of a 4.1% decline. On the other hand, imports remained strong, climbing 9.8% (May: +12.3% yoy), which was, nevertheless, below the 11.0% rise anticipated by markets. As a result, the trade balance registered a positive reading of JPY 71 billion (USD 853 million) compared with the deficit of JPY 856 billion tallied in May. Motor vehicle exports, which account for around 13% of total shipments, continued to drag down overall exports falling 12.5% over the same month last year, but recovering markedly from the 38.9% drop recorded in May and the 67.0% plunge in April. Exports to China, Japan's largest trade partner, grew 1.2%. On the other hand, imports of petroleum, which account for around 15% of total purchases, soared 30.1%. Japan's demand for petroleum is rising, as the countries' fuel-based power plants try to compensate for the loss in nuclear power generation. A monthly analysis corroborates the improvement seen in annual figures, with exports expanding a seasonally adjusted 5.4% over the previous month, which followed on a revised 2.2% increase tallied in May. Meanwhile, imports added a paltry 0.5% over the previous month, slowing from May's 2.3% expansion. The recovery in the external sector has been quicker than initially expected as the manufacturing industry is rapidly returning to pre-quake levels. However, the strength of the yen, which is moving to near record-high levels, may jeopardize the recovery in the Japanese export industry going forward.