Japanese export values rose 8.3 percent on year in April for the fifth straight increase, led by solid global demand for automobiles and Asian purchases of semiconductors while export volumes continued falling. The pace of increase was slower than the consensus forecast of a 11.1 percent gain but accelerated from the 7.3 percent rise in March.

Import values rebounded 8.3 percent (consensus was an 8.8 percent rise) after falling a downwardly revised 5.1 percent in March and posting the first year-over-year increase in 11 months with a slight 0.6 percent rise in February. The increase was led by higher prices and volumes of crude oil as well as purchases of aircraft and computers.

Export volumes fell 3.2 percent on year in March for the third straight drop after falling 2.1 percent in March while import volumes rose 0.7 percent after slipping 9.4 percent in March and rising 1.5 percent in February, which was the first increase in 16 months.

The trade balance recorded a ¥462.5 billion deficit (versus the median forecast of a ¥295.9 billion deficit) after showing a revised ¥387.0 billion surplus in March and a ¥383.0 billion deficit in February. It is wider than a ¥429.8 billion deficit in April 2023 but narrower than a record shortfall of ¥3,506.43 billion (¥3.51 trillion) hit in January 2023.

Shipments to China, a key export market for Japanese goods, posted their fifth straight increase after a year-long decline through November last year amid a gradual recovery in the world's second-largest economy. Japanese exports to the European Union posted the first drop in five months but exports to the U.S. remain robust, up for the 31st straight month, after hitting a record high amount in December 2023.

Econoday's Relative Performance Index (RPI) stands at minus 5, just below zero, which indicates the Japanese economy is performing largely as expected after underperforming with a wider margin recently. Excluding the impact of inflation, the RPI is at minus 5. The first quarter GDP data released last week showed Japan's wobbly economy marked the first slump in two quarters after it narrowly averted a second straight contraction in the final quarter of 2023.

Japanese export values are forecast to rise a sharp 11.1 percent for a fifth straight year-over-year increase in April after rising 7.3 percent in March, led by automobiles, semiconductors and chip-making equipment. Import values are expected to rebound 8.8 percent in light of higher prices of crude oil and purchases of aircraft and computers after falling a revised 5.1 percent in March and edging up 0.5 percent in February for the first rise in 11 months.

The trade balance is forecast to show a ¥295.9 billion deficit after recording a revised ¥387.0 billion surplus in March and a ¥383.0 billion deficit in February. It would be narrower than a ¥429.8 billion deficit in April 2023 and a record shortfall of ¥3,506.43 billion (¥3.51 trillion) hit in January 2023.

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.