JP: Merchandise Trade

Sun Nov 19 17:50:00 CST 2017

Consensus Actual Previous Revised
Level Y332B Y285B Y670B Y668B
Exports-Y/Y 16.0% 14.0% 14.1%
Imports-Y/Y 21.3% 18.9% 12.0% 12.0%

Japan's merchandise trade surplus narrowed from a revised Y668 billion in September to Y285 billion in October, below than the consensus forecast of a surplus of Y332 billion. The value of Japan's exports increased 14.0 percent on the year in October, little changed from 14.1 in September and falling short of the consensus forecast of 16.0 percent. The value of Japan's imports advanced 18.9 percent on the year, accelerating from the revised growth of 12.0 percent in September but falling short of the consensus forecast of 21.3 percent.

The stability in headline exports growth in October was also evident in Japan's exports to elsewhere in the region, with year-on-year growth in exports to Asia picking up slightly from 18.7 percent to 18.9 percent. Weaker demand from China and Hong Kong was broadly offset by stronger demand from Korea, Taiwan and Singapore. Outside the region, year-on-year growth in exports to the United States slowed from 11.1 percent in September to 7.1 percent in October, but this was again broadly offset by an increase in growth in exports to the European Union, up from 11.6 percent to 15.8 percent.

Stronger headline imports growth in October was largely driven by petroleum imports, which grew more strongly in both volume and value terms. The volume of these imports grew by 7.8 percent on the year in October after dropping by 5.3 percent in September, while year-on-year growth in their value accelerated sharply from 15.0 percent to 43.0 percent. Stronger imports of foodstuffs, manufactured goods, and electrical machinery also made significant contributions to the increase in headline imports growth in October.

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.