Japan's export values rose by 4.2 percent on year in September, the first such rise in five months, after declining 0.1 percent on year in August. The September increase was just below the consensus expectation calling for a 4.6 percent rise.

JAPAN SEPT TRADE: EXPORT VOLUMES DOWN FOR 2ND STRAIGHT MONTH; TRUMP TARIFFS TAKE TOLL DESPITE JAPANESE CAR MAKER DISCOUNT SALES

JAPAN SEPT IMPORTS +3.3 Y/Y (AUG -5.2%), 1ST RISE IN 3 MONTHS; MEDIAN FORECAST +1.7%

JAPAN SEPT TRADE DEFICIT ¥234.6 BLN (AUG REVISED ¥242.78 BLN DEFICIT); 3RD STRAIGHT DEFICIT; MEDIAN FORECAST ¥65.10 BLN DEFICIT

JAPAN SEPT EXPORT Y/Y RISE LED BY COMPUTER CHIPS, MINERAL FUELS, RAW MATERIALS

JAPAN SEPT IMPORT Y/Y RISE LED BY COMPUTERS, SMART PHONES, AIRCRAFT; COAL, CRUDE OIL, LNG CONTINUE TO DROP

JAPAN SEPT EXPORTS TO US -13.3% Y/Y, 6TH STRAIGHT DROP (AUG REVISED -13.7% FROM -13.8%), LED BY AUTOS, CHIPMAKING EQUIPMENT, ENGINES

JAPAN SEPT EXPORTS TO EU +5.0%, 2ND STRAIGHT RISE (AUG REVISED TO +5.6% FROM +5.5%), LED BY AUTOS, MINING EQUIPMENT, ENGINES

JAPAN SEPT EXPORTS TO CHINA +5.8% Y/Y, 1ST RISE IN 7 MONTHS (AUG -0.5%) LED BY RAW MATERIALS, AUTOS, COMPUTER CHIPS

Japanese export values are forecast to post their first year-on-year rise in five months in September, up 4.6%, after being nearly flat (-0.1%) in August and slipping 2.6% in July, thanks to the recent economic recovery in Europe and solid demand from Asia, led by Taiwan, Hong Kong and Vietnam. The rebound in exports is expected to be led by ships, computer chips and raw materials while those of automobiles and iron/steel continued falling.

The late emergence of a silver lining in external demand for the third quarter is still clouded by sluggish demand from the key U.S. market as the protectionist trade policy under the Trump administration targeting the auto and metals industries continues to bite and the Chinese economic recovery remains wobbly.

Trump tariffs forced Japanese carmakers to slash the prices for U.S. customers, basically covering high import costs and thus protecting their market share in the world’s biggest economy. That worked initially but the August trade data showed the volumes of Japanese exports to the world fell for first time in five months, causing jitters.

Import values are expected to rebound a slight 1.7% for the first rise in three months and the fourth this year after slumping 5.2% in August and 7.4% in July. The increase is driven by aircraft from the United States and computers (with the latest Windows 11 operating system) and smartphones from Asia, as seen in the previous month, which is partly offset by continued declines in prices for crude oil, coal and liquefied natural gas.

Combining those factors, the trade balance is forecast to post a small deficit of ¥65.10 billion following a revised ¥242.78 billion deficit in August and a ¥306.09 billion deficit in September 2024.

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.