July Trade Statistics

◆According to July 2015 trade statistics, export value grew for the eleventh consecutive month at +7.6% y/y, while exceeding market consensus (+5.2%). Although growth appears to have slowed down in comparison to the previous month’s +9.5%, this was mainly due to the number of business days in July and the price effect due to yen appreciation. Export volume continued to mark time, repeating the pattern seen over the last few months. Meanwhile, import value declined by -3.2% y/y, its seventh consecutive month of decline, and the trade balance was in the red for the fourth consecutive month at -268.1 bil yen.

◆This month’s results confirm that overseas demand continues to be stagnant. However, momentum has left behind its worst period, and signs of hitting bottom have begun to emerge. Exports are expected to recover gradually in the future, alternating between moments of strength and weakness.

◆The corporate sector in the US carries the weight of sagging crude oil prices and a strong dollar. It should therefore be noted that capital goods, a major export item to the US, may continue to perform unfavorably. However, the household sector continues to maintain a steady undertone, and exports centering on durables are expected to recover and enter a growth phase. 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 comeback. Recovery and expansion should continue in the future. Meanwhile in Asia, 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, and the reducing of exchange rate interventions in the form of purchasing renminbi. There is a good chance that further declines in demand can be avoided.