September Trade Statistics

◆In the September Trade Statistics (Ministry of Finance), export value declined 10.3% y/y, a wider slide than the market consensus (down 9.9%) and the fourth monthly slide in a row. Meanwhile, although export value increased 0.9% m/m, the first gain in five months on a seasonally adjusted basis, the underlying deterioration continues. Looking at export volume (seasonally adjusted; DIR estimate) by trading partner, that to Asian trading partners and the EU increased m/m, but that to the US declined. Thus, export volume saw a slide of 0.8% m/m as a whole. In general, while exports to the EU and Asian trading partners have been sluggish, overall exports have been supported by those to the US. However, the latter have also begun to run out of steam recently.

◆Amid worsening Japan-China relations since mid-September, trends of exports to China have attracted market attention. Export value to China declined 14.1% y/y, widening the slide from August (down 9.9%). Nevertheless, the y/y decline continued for the fourth consecutive month. Thus, the major factor behind sluggish exports to China is likely the slowdown in the Chinese economy. However, exports of transportation equipment widened the slide from August (down 14.0%) to September (down 32.1%), which may reflect the worsening of Japan-China relations. The relations thus warrant watching.