Japanese export values rose 11.9 percent on year in January, as largely expected (consensus was 11.5 percent), after rebounding a revised 9.7 percent to a record high in December, led by shipments of automobiles, parts and semiconductor-producing equipment.

Import values fell for the 10th straight month as energy prices remained below year-earlier levels and demand for foreign-made smartphones sagged due to high prices. The pace of decrease accelerated to 9.6 percent from a revised 6.9 percent. The median forecast was a 7.5 percent drop.

The trade balance recorded a ¥1,758.3 billion (¥1.76 trillion) deficit after chalking up a revised ¥68.89 billion surplus in December, which was the first positive figure in three months. The deficit was narrower than the median forecast of ¥1,923.4 billion (¥1.92 trillion) and much smaller than a record shortfall of ¥3,506.43 billion (¥3.51 trillion) hit in January 2023.

Shipments to China, one of the key export markets for Japanese goods, posted their second straight increase, surging 29.2 percent in January, after marking the first year-over-year rise in 13 months in December. The sharp gain in January was partly in reaction to a 17.1 percent slump in January 2023; the world's second largest economy is generally struggling to recover under the weight of property market problems.

Japanese exports to the European Union also posted the second consecutive gain after showing their first year-over-year drop in 33 months in November while exports to the U.S. remained robust, up for the 28th straight month, after rising to a record high in December.

However, Econoday's Relative Performance Index stood at minus 31, below zero, which indicates the Japanese economy is performing worse than expected. Excluding the impact of inflation, the RPI was at minus 39.

Japanese export values are forecast to rise 11.5 percent on year in January after rebounding 9.7 percent to a record high in December, led by shipments of automobiles, parts and semiconductor-producing equipment. There is a downside risk posed by reduced electronic parts supply in the aftermath of a powerful earthquake and suspended vehicle output at the Toyota Motor group over a vehicle safety scandal. Import values are expected to slip 7.5 percent for a 10th straight drop amid lower energy prices after falling 6.9 percent. The trade balance is forecast to show a ¥1,923.4 billion (¥1.92 trillion) deficit after recording a revised ¥68.89 billion surplus, the first positive figure in three months. It would be much narrower than a record shortfall of ¥3,506.43 billion (¥3.51 trillion) hit in January 2023.

In its monthly economic report for January, the government downgraded its assessment of exports for the first time in 12 months, saying their"pickup is pausing" compared to its previous view that they were"showing signs of a pickup."

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.