March Trade Statistics

◆In the March 2013 Trade Statistics (Ministry of Finance), export value increased 1.1% y/y, the first gain in two months, surpassing consensus expectations (up 0.2%). Breaking down export value, in contrast to the tenth consecutive monthly slump in export volume (down 9.8%), the ongoing substantial gain in export price (up 12.1%), reflecting the weaker yen trend, has contributed to pushing up export value.

◆The Export Volume Index (seasonally adjusted by DIR) increased from the previous month for shipments to the US, EU and Asian trading partners, the three major destinations of Japan’s exports. As a whole, it posted the first advance in three months (up 4.2% m/m). Export volume to Asian trading partners may have increased partly in reaction to the slide in February due to the Lunar New Year factor. However, advances were seen as well for that to the US and EU, for which the impact of such a factor is limited, signaling an end to the underlying downtrend in export volume.

◆We anticipate export volume will move toward firming up from persistent sluggishness, leading to an uptrend in exports. Export volume to the EU is likely to remain sluggish for the time being, dragged down by ongoing economic stagnation there. In contrast, that to the US is likely to drive overall export volume, supported by the ongoing moderate economic recovery there.That to Asian trading partners is likely to shift to an uptrend, centering on that to ASEAN nations, where economies have grown steadily, in contrast to a modest recovery in China. In addition to the overseas factor, the forex factor will also support export volume as positive effects of the shift to a weaker yen since end-2012 will emerge gradually—empirically, the shift to a weaker yen will lead to a gain in export volume with around a six-month lag.