Japan recorded an unadjusted merchandise trade surplus of ¥692.8 billion after May's ¥40.6 billion. Exports contracted for their ninth straight month, underscoring the challenges for manufacturers as they battle sluggish global growth and currency fluctuations. Exports dropped 7.4 percent from a year ago, less than the expected 11.6 percent decline. Imports also continued to fall, dropping for an eighteenth consecutive month, indicating consumer demand also remains weak. Imports dropped 18.8 percent in June, more than the 13.8 percent recorded for May but less than the 19.7 percent expected.
Unadjusted exports with Asia were down 7.2 percent on the year and with China, down 10.0. Exports with the European Union slipped 0.4 percent while those to the U.S. declined 6.5 percent.
On a seasonally adjusted basis, the trade surplus was ¥335.0 in June. The trade balance has been in surplus since November 2015. In June, exports were up 1.3 percent and down 10.1 percent from a year ago. Imports were up 0.6 percent in June but were 18.8 percent lower on the year.
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.
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.
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