JP: Merchandise Trade

October 23, 2016 06:50 CDT

Consensus Actual Previous Revised
Level Y341.8B Y498.3B Y-18.7B Y-19.2B
Exports-Y/Y -10.4% -6.9% -9.6%
Imports-Y/Y -16.6% -16.3% -17.3%

Japan recorded a merchandise trade surplus of Y498.3 in September, up from a revised deficit of Y19.2 billion in August and larger than the consensus forecast for a surplus of 341.8 billion. This is the sixth monthly trade surplus so far this year, with the overall trade balance for 2016 also well in surplus.

The larger-than-expected trade surplus in September mainly reflects somewhat stronger-than-expected export performance. Exports fell in year-on-year terms for the twelfth consecutive month in September, but the drop of 6.9 percent was smaller than the consensus forecast for a fall of 10.4 percent and was also an improvement on the fall of 9.6 percent recorded in August.

External demand remains weak in most of Japan's major trading partners, reflecting ongoing strength in the domestic currency. Exports to Asia (including China) and the United States both fell in year-on-year terms for the seventh consecutive month, though this was partly offset by a small year-on-year rise, the first in five months, in exports to the European Union.

Imports were broadly in line with expectations, falling by 16.3 percent year-on-year compared with the consensus forecast for a fall of 16.6 percent. Imports have now fallen in year-on-year terms for twenty-one consecutive months, mainly reflecting the impact of lower global oil prices.

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.