October Trade Statistics

◆According to October 2015 trade statistics, export value fell for the first time in 14 months by
-2.1% y/y. The main reason for the decline was sluggish growth in export prices (+2.5% in comparison to September’s +4.6%). Export volume fell by -4.6% y/y, but looking at the seasonally adjusted value as discussed later in this report, volume is beginning to show signs of bottoming out, so these results are not necessarily all that bad. Import value was down by
-13.4% y/y in its tenth consecutive month of decline, while the trade balance was in the black for the first time in seven months at +111.5 bil yen.

◆This month’s results suggest that overseas demand is gradually pulling out of its worst period. Complete recovery will of course take some time. Most of all caution is required regarding the US, whose corporate sector carries the weight of sagging crude oil prices and a strong dollar, as well as Asia, which needs to make more adjustments for overcapacity. This means that likely Japanese exports of capital goods and materials will continue unfavorably for some time. However, exports are expected to gradually recover despite some ups and downs along the way. The US 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. When all is averaged out, the EU is entering a recovery phase. 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 there is a good chance that further declines in demand centering on consumer goods can be avoided.