June Trade Statistics

◆According to June 2015 trade statistics, export value grew for the tenth consecutive month at +9.5% y/y, remaining more or less in line with market consensus (+10.0%). Although this was an improvement in comparison to the previous month’s +2.4%, the main reasons for that improvement were the number of business days in June and the effect of the weak yen. Export volume continued on a weak note due to sluggish exports to the US. Meanwhile, import value declined by -2.9% y/y, its sixth consecutive month of decline and trade balance was in the red for the third consecutive month at -69 bil yen.

◆On the whole, this month’s results indicate that the recovery in overseas demand and the trend toward expansion in trade have temporarily shifted to a standstill. In the US, falling crude oil prices and a strong dollar have put the brakes on further advances in the corporate sector. Possibilities are that sluggishness will continue for capital goods, Japan’s major export to the US.

◆As for the future of exports, we retain our previous opinion that the moderate growth trend will continue despite some ups and downs along the way. The US economy maintains a steady undertone centering on the household sector, and recovery is seen in exports of durable goods. As for the EU economy, the collapse in the price of crude oil and the effects of quantitative easing initiated by the ECB are encouraging a gradual comeback. This could become a major pull for Japanese exports. Meanwhile in Asia, possibilities are high that the difficult phase for the economy, centering on China, will continue for the midterm. At the same time, China’s real economy is beginning to show signs of pulling out of the doldrums due to the lowering of its reserve deposit rate and interest rate. This is expected to bring a recovery in exports of capital goods, which have been stagnant of late.