JP: Merchandise Trade

Wed Aug 16 18:50:00 CDT 2017

Consensus Actual Previous
Level Y392.0B Y418.8B Y439.9B
Exports-Y/Y 13.6% 13.4% 9.7%
Imports-Y/Y 17.0% 16.3% 15.5%

Japan's merchandise trade surplus narrowed slightly from Y439.9 billion in June to Y418.8 billion in July, exceeding the consensus forecast of a surplus of Y392.0 billion. The value of Japan's exports increased 13.4 percent on the year in July, accelerating from 9.7 percent in June and close to the consensus forecast of 13.6 percent. The value of Japan's imports advanced 16.3 percent on the year, up from 15.5 percent in June and slightly below the consensus forecast of 17.0 percent.

Japans exports have now risen on the year for eight consecutive months, with the pick-up in growth in July mainly reflecting stronger demand from the United States. Exports to the US rose 11.5 percent on the year in July, up from 7.1 percent in June, with year-on-year growth in exports to ASEAN countries also accelerating significantly from 7.5 percent to 17.6 percent. These gains were partly offset by weaker growth in exports to China, down from 19.6 percent to 17.6 percent, and the European Union, down from 9.6 percent to 8.3 percent.

Stronger headline imports growth in July was partly driven by a smaller year-on-year fall in the volume of petroleum imports and a bigger increase on the year in their value, up from 3.1 percent in June to 7.9 percent in July. The value of raw materials imports also posted stronger year-on-year growth, up from 24.1 percent to 30.7 percent, as did the value of imports of manufactured goods, machinery and electrical machinery. Imports of coal, transport equipment and chemicals recorded weaker year-on-year growth in July.

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.