Key points from October trade data:
--Japan October exports post 2nd straight y/y rise on solid demand for autos but trade balance slips back into deficit amid slower global growth
--Export volumes down after 1st y/y gain in 12 months in September
--Imports mark 7th straight y/y fall on easing energy prices
--Exports to China show 11th straight y/y drop on chips, iron/steel

Japanese export values posted their second straight year-over-year rise in October, rising a stronger-than-expected 1.6 percent to the second highest amount on record on continued solid demand for automobiles, but shipments to the world slowed after climbing 4.3 percent to a record high in September as credit tightening by major central banks is dampening demand for electronic parts and devices, data released Thursday by the Ministry of Finance showed.

Import values fell on the year for the 7th straight month, down 12.5 percent, as energy costs have eased from last year's spike, while the pace of decrease decelerated from September's revised 16.4 percent dip amid recovering domestic demand, which in turn pushed the trade balance back into a deficit worth ¥662.5 billion, following a revised ¥72.1 billion surplus in September and a large ¥2.17 trillion deficit seen a year earlier.

Shipments to China, one of the key export markets for Japanese goods, posted their 11th straight year-over-year decline in October, led by declines in semiconductors and iron and steel, although shipments of chip-making equipment were up after rebounding the previous month.

Econoday's Relative Performance Index stood at minus 11, below zero, which indicates the Japanese economy is performing worse than expected. Excluding the impact of inflation, the RPI was at minus 4.

Export values rose 1.6 percent on the year to ¥9.15 trillion, the second highest on record, in October after rising 4.3 percent to a record high of ¥9.20 trillion in September. 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 0.6 percent rise (forecasts ranged from being flat to a 2.8 percent gain). It was led by higher shipments of automobiles, ships and construction/mining equipment, offsetting a continued drop in semiconductor-producing equipment.

Export volumes fell 3.3 percent on the year in October after rising 0.7 percent in September for the first rise in 12 months and falling 5.3 percent in August.

Import values fell 12.5 percent on the year in October for the seventh straight decrease after falling a revised 16.4 percent in September and 17.7 percent in August and marking their first decline in 27 months with a 2.3 percent drop in April. It was larger than the median forecast of a 11.9 percent fall (forecasts ranged from 13.0 percent to 9.2 percent drops). The decrease was led by coal, liquefied natural gas and crude oil as the prices for energy remain below year-earlier levels.

Import volumes dipped 3.2 percent on year in October for the 12th straight decrease after sliding 2.6 percent in September and 7.3 percent in August.

The trade balance came to a deficit of ¥662.5 billion in October after chalking up an unexpected surplus of a revised ¥72.09 billion in September and a ¥943.2 billion deficit in August. It compared with the consensus forecast of a ¥688.4 billion deficit (forecasts ranged from ¥1.09 trillion to ¥437.0 billion deficits), a record high deficit of ¥3.51 trillion hit in January and a large ¥2.17 trillion deficit seen a year earlier. The ¥39.2 billion surplus in June was the first positive figure in 23 months.

Japanese export values are forecast to post their second straight year-over-year rise in October, up a slight 0.6 percent, on continued solid demand for automobiles from the US and Europe, but exports seem to have lost some steam after rising 4.3 percent to a record high in September as credit tightening by major central banks is dampening demand for capital goods and electronic parts and devices.

Import values are expected to have fallen on the year for the 7th straight month, down 11.9 percent, as energy costs have eased from last year's spike, while the pace of decrease is seen decelerating from September's revised 16.4 percent dip amid recovering domestic demand, which in turn likely pushed the trade balance back into a slight deficit worth an expected ¥688.4 billion. That would compare with an unexpected surplus of a revised ¥72.09 billion in September and a large ¥2.17 trillion deficit seen 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.