JP: Merchandise Trade

Wed Oct 18 18:50:00 CDT 2017

Consensus Actual Previous Revised
Level Y565.1B Y670B Y113.6B Y113B
Exports-Y/Y 14.9% 14.1% 18.1%
Imports-Y/Y 14.6% 12.0% 15.2%

Japan's merchandise trade surplus widened from Y113 billion in August to Y670 billion in September, exceeding the consensus forecast of a surplus of Y565 billion. The value of Japan's exports increased 14.1 percent on the year in September, slowing from 18.1 percent in August and falling short of the consensus forecast of 14.9 percent. The value of Japan's imports advanced 12.0 percent on the year, down from 15.2 percent in August and also below the consensus forecast of 14.6 percent.

Similar to Singapore trade data released earlier in the week, today's data also points to weaker regional trade flows in September, perhaps indicating some impact from the recent escalation of tensions between the North Korean regime and its neighbours. The value of Japan's exports to other Asian countries rose by 18.7 percent in September, down from 19.9 percent in August, while year-on-year growth in imports from the region decelerated from 13.7 percent to 7.7 percent. Nevertheless, growth rates in exports to and imports from South Korea were relatively stable in September compared with August, with Hong Kong and Singapore driving much of the decline in regional exports growth and China and Taiwan responsible for much of the decline in regional imports growth.

The decline in headline exports growth in September also reflects weaker demand from the United States and Europe. Exports to the United States grew by 10.1 percent on the year, down from 21.8 percent in August, while year-on-year growth in exports to the European Union slowed from 13.7 percent to 11.5 percent.

Weaker headline imports growth in August was partly driven by slower year-on-year growth in imports of mineral fuels including petroleum, natural gas, and coal. Imports of manufactured goods, raw materials, automobiles, and machinery also recorded weaker year-on-year growth in September. This was partly offset by stronger growth on the year in imports of chemicals and aircraft.

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.