Japan's Oct exports down as yen gains strength

A container area in a port in Tokyo, Japan. Shipments to Asia, which account for more than half of Japanese exports, fell 9.9 per cent last month from a year earlier, marking a 14th month of declines.
A container area in a port in Tokyo, Japan. Shipments to Asia, which account for more than half of Japanese exports, fell 9.9 per cent last month from a year earlier, marking a 14th month of declines.PHOTO: REUTERS

10.3% decline in the year to Oct more than expected, due in part also to sluggish foreign demand

TOKYO • Japan's exports fell last month for a 13th consecutive month and by more than expected as the strength of the yen and weak foreign demand weighed on trade, although current yen weakness could change the outlook.

Ministry of Finance data showed yesterday that exports fell 10.3 per cent in the year to October, pulled down by a strong rise in the value of the yen and lower export volumes, much weaker than the expected 8.6 per cent drop and September's 6.9 per cent decline.

The trade results came on the heels of recent data showing Japan's economy expanded for a third quarter from July to September as exports recovered and imports fell.

In terms of volume, exports dipped 1.4 per cent in the year to October, down for the first time in three months and following a 4.7 per cent gain in the previous month.

"Overall, exports are starting to stall and this month's results are disappointing," said Mr Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance. "The data once again shows that global economic recovery isn't necessarily smooth sailing," said Mr Kodama, adding that overall economic growth from last month to next month may stall.

But Mr Marcel Thieliant, senior Japan economist at Capital Economics, said the dramatic fall in the value of the yen since Mr Donald Trump became United States President-elect could help turn around Japan's export performance.

"Looking ahead... we expect it (the yen) to decline further next year, which should lift trade values.

"We also expect growth among Japan's main trading partners to pick up marginally, and have pencilled in a 1.5 per cent rebound in export volumes next year," Mr Thieliant said in a commentary after the trade figures were posted.

Imports last month fell 16.5 per cent versus the median estimate of a 16.3 per cent fall. The trade balance came to a surplus of 496.2 billion yen (S$6.4 billion), versus the median estimate of a 615.4 billion yen surplus.

The value of exports to China fell 9.2 per cent last month from a year earlier, for the eighth straight month, as shipments of communication devices fell.

Shipments to Asia, which account for more than half of Japanese exports, fell 9.9 per cent, marking a 14th month of declines. US-bound exports decreased 11.2 per cent, posting an eighth month of falls.

However, a private business survey showed that Japanese manufacturing activity expanded at the fastest pace in nine months last month as output and new export orders picked up.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 22, 2016, with the headline 'Japan's Oct exports down as yen gains strength'. Print Edition | Subscribe