January Trade Statistics

◆In the January 2013 Trade Statistics (Ministry of Finance), export value increased 6.4% y/y, the first advance in eight months, with a wider gain than consensus expectations (up 5.6%). On a seasonally adjusted basis, export value increased 3.6% m/m, the third consecutive monthly gain, indicating that the underlying trend began to cease persistent declines. However, export volume declined 6.0% and the ongoing slide continued. While industrial production and other domestic economy-related indicators tend to closely follow the export volume trend, the degree of export recovery is insufficient to drive the domestic economy.

◆Looking at export volume (seasonally adjusted; DIR estimate) by trading partner, that to the US increased for the second consecutive month, that to Asian trading partners remained flat from the previous month, and that to the EU declined. As a whole, it saw the first slide in two months (down 2.4% m/m). While underlining trends of export volume to the US and Asian trading partners began to show signs of recovery, the trend to the EU hampered overall exports.

◆Import value increased 7.3% y/y, the third consecutive monthly gain. Behind this was an import price surge (up 8.4%), due to the sharp shift to a weaker yen. As a result, the trade balance posted a deficit of Y1,629.4 billion, a negative figure for the seventh consecutive month and the largest-ever deficit. On a seasonally adjusted basis, however, the trade balance posted a deficit of Y678.9 billion, narrowing the margin of deficit for the second consecutive month. While the trade balance has been on the deficit side as import volumes of LNG and other fuels have remained high, the deficit margin began to signal a halt to expansion.