January Trade Statistics

◆January 2014 trade statistics recorded the 11th consecutive monthly gain at 9.5% y/y, but fell below market consensus (+12.7%). Export amount in terms of price was up 9.7% y/y, continuing major growth, while export volume fell below in y/y terms for the first time in four months at -0.2%. This was most likely due to overall export amount dragging somewhat. In seasonally adjusted terms export amount was down for the second consecutive month at -3.5% m/m.

◆Export volume index on a seasonally adjusted basis (DIR) fell for the second consecutive month at -0.7% m/m. By region, exports to the U.S. grew 7.4% m/m, while those headed for the EU were down by 3.1% along with Asia recording -3.2%, thereby dragging down the overall figures. However, the decline in exports to Asia is thought to be due largely to seasonal factors. Hence it can be interpreted as merely a temporary setback.

◆We expect that export volume to all regions will continue to improve. Exports should gradually gain momentum, especially to the U.S. and EU, where economic expansion is expected to continue.

◆The trade deficit is a difficult hurdle to overcome. Of the 11.5 trillion yen posted in 2013, four trillion yen is seen as being due to the increase in imports associated with the shutdown of nuclear power plants, while seven trillion yen is considered to be due to the hollowing out effect. However, we believe that the trade balance will gradually improve beyond midyear.