Booming shipments of cars and electronics in August drove up Japan’s exports at the fastest pace in nearly four years, further evidence that overseas demand is strong enough to support healthy economic growth.
The 18.1% annual increase in exports was the fastest since November 2013 and handily beat the median estimate for a 14.7% annual rise seen in a Reuters poll.
August’s export result was well up on July’s 13.4%, and marked a ninth straight month of expansion.
Export growth is seen likely to continue as the global economy remains on a solid footing, which should underpin policymakers’ confidence in Japan’s economic outlook.
The Bank of Japan is expected to keep monetary policy on hold at a meeting ending on Thursday as inflation remains confusingly low despite data pointing to solid economic growth.
Japan’s exports rose 10.4% by volume in August from a year ago, following a 2.6% annual increase in July.
A pickup in shipments of cars, car parts, and semiconductor manufacturing equipment increased Japan’s year-on-year exports to the United States in August by 21.8% versus an 11.5% annual increase in the previous month.
China-bound exports rose 25.8% year-on-year in August, faster than a 17.6% annual increase in July as Japan shipped more electronic screens panels and plastics.
Imports rose 15.2% in the year to August, versus the median estimate of an 11.8% increase.
The trade balance came to a surplus of 113.6 billion yen ($1.02 billion), versus the median estimate of a 93.9 billion yen surplus. However, the figure was much lower than market expectations of a 356.7-billion-yen surplus.
Japan’s politically sensitive trade surplus with the United States soared 49.6% to 534.7 billion yen ($4.8 billion) on increased exports of cars and microchip-making equipment, the second consecutive monthly rise, AFP reported.
The nation’s trade flows with the US, over which the two countries battled for decades into the 1990s, has become less of a hot-button issue under recent presidential administrations.
Japan logged its first trade deficit in two months with the European Union, while its deficit with China decreased by 30.4%.
Economist Views
“In a word, the trade data is strong,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. “Imports are strong, but exports were stronger, and this is definitely a positive reading.”
“The actual content of the data is better than the headline balance number,” Shinke said. “Autos and semiconductors are leading the export growth.”
“In the third quarter, we will see a trend reversal in the Japanese economy,” said Hiroaki Muto, chief economist at Tokai Tokyo Research Center. “External demand will be strong and consumption will lack momentum.”
