Japanese Exports Surge to End First Quarter on Strong Note

• Japanese Exports Surge to End First Quarter on Strong Note

Japanese exports grew at the fastest rate in more than two years in March, supporting a moderate economic recovery in the face of weak domestic demand.

Key Numbers

• Exports rose 12 percent from a year earlier (median estimate +6.2 percent), according to data released by the Ministry of Finance.
• Imports jumped 15.8 percent (median estimate 10 percent), the biggest gain in more than three years.
• The trade surplus for March was 614.7 billion yen ($5.64 billion), compared with an estimate of 608 billion yen.

Big Picture

Exports have recently become a bright spot for the Japanese economy. The March trade data indicate growing health in the global economy, particularly in Asia, will continue to support the Bank of Japan’s efforts to generate a sustainable recovery. Questions remain: Will Japanese consumers will start spending again, and will the U.S. take a tougher line with Asian exporters over their trade surpluses with America.

Economist Takeaways

• “Japan’s production and exports are rising on the back of a global rebound in manufacturing,” said Masaki Kuwahara, senior economist at Nomura Securities Co. “In Asia, developing nations are doing well cyclically and that’s directly helping Japan’s exports.”
• “A key point will be whether the U.S. economy gets back on a firm footing,” Kuwahara said. “Exports to the U.S. have been weaker than to Asia.”
• Izumi Devalier, head of Japan economics at Bank of America Merrill Lynch, said on Bloomberg TV that export growth will be very solid for another six months or so. “But we are a little bit cautious about the outlook after the summer given that we expect a little bit of a slowdown in China, reflecting some monetary tightening that’s going on over there right now,” she said.

The Details

• Exports to the U.S. increased 3.5 percent from a year earlier.
• Those to the EU rose 1.4 percent.
• Shipments to China, Japan’s largest trading partner, climbed 16.4 percent.
• The value of exports reached the highest level since September 2009, and exports saw the largest annual percentage increase since January 2015.
• Exports of auto parts jumped 21.2 percent from a year earlier; much were to Japanese automakers in the U.S.
• Liquid crystal devices to China and iron and steel products to Thailand helped exports to Asia reach a record monthly high at 3.86 trillion yen.