April Trade Statistics

◆According to April 2016 trade statistics, export value fell for the seventh consecutive month by -10.1% y/y. Results were generally aligned with market consensus at -9.9%. While export price showed signs of bottoming out, export volume declined, bringing downward pressure on export value. Import value also declined for the sixteenth consecutive month at -23.3% y/y. This put the trade balance in the black for the third consecutive month at +823.5 bil yen. Looking at the trade balance in seasonally adjusted terms, the extent to which trade balance was in the black increased in comparison to the previous month, suggesting that the trade surplus has become well established.

◆As for the future of exports, there is a very good possibility that performance will continue to mark time, with some ups and downs along the way. The effects of monetary easing in the world economy overall produces a financial environment which is expected to provide support for relatively favorable demand in the area of consumer goods. However, we expect that it will take quite a bit more time for a significant and sustainable recovery in demand for materials and capital goods (in other words corporate sector demand) to take hold as low operating rates continue, along with the decline in raw materials prices. Meanwhile, caution is required as regards stagnant export value, which is a reflection of the progressively stronger yen since the beginning of the year, since it will likely influence corporate earnings on a yen basis.