Japanese export values posted a fifth straight year-on-year rise in February, up 11.4% (the highest for the month of February), after rising a revised 7.3% in January. The increase was led by continued strong demand for automobiles, semiconductor-producing equipment and computer chips. Export volumes rebounded 2.9% for the first y/y rise in four months. There appear to be some rush exports to the key U.S. market in the face of the threat of stiff tariffs on imports of steel and aluminum among other goods.

Import values marked their first drop in three months, down 0.7%, following a revised 16.5% rise the previous month. Lower purchases of crude oil, coal and non-ferrous metals offset continued solid demand for smartphones. Import volumes dipped 3.9% for the first drop in three months. Both exports and imports tend to show irregular patterns around the lunar new year holidays in some Asian countries, which began on Jan. 29 this year.

The trade balance posted a surplus of ¥584.5 billion for the fourth black ink in 12 months following a revised ¥2,736.6 billion (¥2.74 trillion) deficit in January. It would compare a ¥382.98 billion deficit in February 2024 and the record shortfall of ¥3,506.43 billion (¥3.51 trillion) in Jan 2023.

Exports to the United States, which is the largest market for Japanese exports, jumped 10.5% on year (+8.1% the previous month), marking their second straight y/y rise. Those to the European Union slipped 7.7% (-15.1%) for the second drop in a row while shipments to China rebounded 14.1% for the first gain in three months (-6.1%).

Japanese export values are forecast to post a fifth straight year-on-year rise in February, up a sharp 13.9%, after rising a revised 7.3% in January. The increase is expected to be led by continued solid demand for automobiles, semiconductor-producing equipment and computer chips. There might have been some rush exports to the key U.S. market in the face of the threat of stiff tariffs on imports of steel and aluminum among other goods.

Import values are expected to mark their first drop in three months, down 1.0%, following a revised 16.5% rise the previous month. A drop in coal imports is seen offsetting higher purchases of automobiles, drugs and smartphones. Both exports and imports tend to show irregular patterns around the lunar new year holidays in some Asian countries, which began on Jan. 29 this year.

The trade balance is forecast to post a surplus of ¥814.5 billion following a revised ¥2,736.6 billion (¥2.74 trillion) deficit in January. It would compare a ¥382.98 billion deficit in February 2024 and the record shortfall of ¥3,506.43 billion (¥3.51 trillion) in Jan 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.