Japan: Trade surplus widen slightly in July
August 18, 2011
In July, exports fell 3.3% over the same month last year (June: -1.6% year-on-year), which came in below market expectations of a 2.6% decline. Imports increased 9.9% (June: +9.8% yoy), which was, nevertheless, below the 11.0% rise anticipated by the market. The trade balance recorded a surplus of JPY 72 billion (USD 938 million) following the surplus of JPY 69 billion tallied in June. Electrical machinery and motor vehicle exports, which together account for around 40% of total shipments, led the monthly contraction, but continued to improve compared with the previous month. On the other hand, imports of petroleum, which account for around 15% of total purchases, climbed 19.1% (June: +30.1% yoy). Japan's demand for petroleum and liquefied natural gas to feed the fuel-based power plants is booming, as they attempt to compensate for the loss of nuclear power generation. Meanwhile, exports to China and the United States fell, while those to the European Union improved. A monthly analysis corroborates the deterioration seen in annual figures, with exports expanding a seasonally-adjusted 0.8% over the previous month, which followed on from a 5.2% increase in June. Meanwhile, imports fell 0.4% over the previous month, slowing from June's 0.3% expansion. The recovery in the external sector remains well on track amid an upswing in manufacturing output, but faltering global demand and a strengthening yen may depress the outlook of the export-driven economy going forward.