Japanese export values posted their first year-over-year rise in three months to a record high in September, thanks to solid demand for automobiles from the US and Europe amid improved supply chains, leading to the country's first trade surplus in three months, data released Thursday by the Ministry of Finance showed.

The trade balance came to an unexpected surplus of ¥62.4 billion in September after a revised ¥937.8 billion deficit in August. It was stronger than the consensus forecast of a ¥388.7 billion deficit (forecasts ranged from ¥600.0 billion to ¥146.4 billion deficits) and compared with a record high deficit of ¥3.51 trillion hit in January and a large ¥2.1 trillion deficit seen a year earlier. The ¥39.2 billion surplus in June was the first positive figure in 23 months.

Import values fell on the year for the sixth straight month after recording their first drop in 27 months in April as energy and commodities prices have generally eased from last year's surge.

Shipments to China, one of the key export markets for Japanese goods, posted their 10th straight year-over-year decline in September, led by declines in semiconductors and food, although shipments of chip-making equipment and mineral fuels rebounded. The world's second-largest economy has been struggling to recover from its pandemic slump.

Econoday's Relative Performance Index stood at plus 33, above zero, which indicates the Japanese economy is performing better than expected after outperforming with a smaller margin recently. Excluding the impact of inflation, the RPI was at plus 47.

Export values rose 4.3 percent on the year to a record high of ¥9.2 trillion in September, exceeding the previous high of ¥9.0 trillion hit in October 2022. Previously, exports fell 0.8 percent in August and edged down 0.3 percent in July, which was the first drop in 29 months. Exports have slowed from double-digit percentage gains seen last year. The increase was larger than the median forecast of a 3.9 percent rise (forecasts ranged from 1.6 percent to 4.5 percent gains). It was led by higher shipments of automobiles, auto parts and drugs, offsetting a pullback in semiconductor-producing equipment and mineral fuels.

Export volumes rose a slight 0.7 percent on the year for the first rise in 12 months after falling 5.3 percent in August.

Import values slumped 16.3 percent on the year in September after falling a revised 17.7 percent in August and 13.6 percent in July and marking their first drop in 27 months with a 2.3 percent drop in April. It was larger than the median forecast of a 13.4 percent decline (forecasts ranged from 14.3 percent to 10.2 percent falls). The decrease was led by crude oil, liquefied natural gas and coal as the prices for energy remain far below year-earlier levels.

Import volumes dipped 2.6 percent on year in September for the 11th straight decrease after sliding 7.3 percent in August.

Japanese export values are forecast to post their first year-over-year rise in three months in September, up 3.9 percent, led by higher shipments of automobiles and auto parts amid recovering supply chains. It would follow a 0.8 percent drop in August and a 0.3 percent dip in July, which was the first decline in 29 months. Import values are seen falling on the year for the sixth straight month, down 13.4 percent versus August's 17.7 percent slump, as energy and commodities prices have eased from last year's spike. Japan is expected to record a third straight month of a trade deficit, worth ¥388.7 billion in September, narrowing from a revised ¥937.8 billion deficit the previous month and a deficit of ¥2,099.19 billion (¥2.1 trillion) a year earlier.

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.