JP: Merchandise Trade


Wed Sep 16 18:50:00 CDT 2015

Consensus Actual Previous Revised
Level Y-541.3B Y-569.7B Y-268.1B Y-268.4B
Exports-Y/Y 4.0% 3.1% 7.6% 7.6%
Imports-Y/Y -2.2% -3.1% -3.2% -3.2%

Highlights
August's merchandise trade deficit was a greater than anticipated ¥569.7 billion, much larger than July's revised deficit of ¥268.4 billion. It was the fifth consecutive month that balance was negative. On the year, exports were up 3.1 percent while imports retreated 3.1 percent. Expectations were for an increase of 4 percent for exports and a decline of 2.2 percent for imports.

Exports to Asia were up 1.1 percent for the sixth straight increase. However, exports to China sank 4.6 percent for the first decline in six months. Exports to the EU slipped 0.2 percent for the first drop in nine months. Exports to the U.S. jumped 11.1 percent for the 12 straight increase.

On a seasonally adjusted basis, the deficit was ¥358.8 billion, down marginally from July's ¥375.1 billion. On the month, exports were down 0.4 percent while imports slipped 0.6 percent. On the year, the former was up 4.8 percent while the latter slumped 3.6 percent.

A weaker yen has been seen as providing a boost to exporters, but that effect seems to be reaching its limit as demand slows in China and emerging markets. That may heighten bets the Bank of Japan will increase the size of its quantitative easing program at its October meeting. Loosening of monetary policy could see the yen drop further. Whether global consumers are willing to buy, though, is a matter that is largely out of the BoJ's hands.

Definition
Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Description
Japan's merchandise trade balance measures visible trade and excludes services. Specifically it is the difference between imports of goods and exports of goods. A positive value indicates a trade surplus (exports exceed imports) while a negative value indicates a trade deficit (imports exceed exports). Movements in the trade balance reflect altered demand for Japanese exports which subsequently impact the yen's value and directly affect GDP growth because of the economy's dependence on trade.

The report gives insight into changing trends regarding Japanese trade. Such developments are especially important for Japan, which is an export-oriented economy that has historically experienced large trade surpluses and any change can have a dramatic effect on the domestic economy. Typically the headline number is the change from the previous year in yen along with the percentage change in exports and in imports from the previous year.