JP: Merchandise Trade

Sun Dec 17 17:50:00 CST 2017

Consensus Actual Previous
Level Y-56.5B Y113.4B Y285B
Exports-Y/Y 14.6% 16.2% 14.0%
Imports-Y/Y 18.8% 17.2% 18.9%

Japan's merchandise trade surplus narrowed to Y113 billion in November from Y285 billion in October, stronger than the consensus forecast for a trade deficit of Y56.5 billion. The value of Japan's exports increased 16.2 percent on the year in November, up from 14.0 percent in October and above the consensus forecast of 14.6 percent. The value of Japan's imports advanced 17.2 percent on the year, slowing from 18.9 percent in October and falling short of the consensus forecast of 18.8 percent.

Stronger headline exports growth in October was largely driven by stronger demand from the united States, with year-on-year growth in Japan's exports there accelerating from 7.1 percent in October to 13.0 percent in November. Exports to elsewhere in Asia also strengthened, up 20.4 percent on the year after increasing by 18.9 percent in October, with particularly strong demand from China and most south-east Asian markets. This was partly offset by a drop in year-on-year growth in exports to the European Union from 15.8 percent to 13.3 percent.

Weaker headline imports growth in November was largely driven by smaller increases in both the value and volume of petroleum imports,. The volume of these imports grew by 1.1 percent on the year in November, down from 7.8 percent in October, while year-on-year growth in their value slowed from 43.0 percent to 28.3 percent. Strong growth in imports of manufactured goods and electrical machinery also made significant contributions to the increase in headline imports growth in November.

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.