Japan's Trade Surplus Rises as Weak Yen Helps Exports


Japan's trade surplus surged in June as a weaker yen and higher overseas demand for electronics and cars helped exports rise at the fastest pace in five months.

The surplus expanded 53.4 percent to 1.23 trillion yen ($10.2 billion) from a year earlier, the Ministry of Finance said in Tokyo. Exports climbed 16.2 percent, more than the 14 percent median estimate of 17 economists surveyed by Bloomberg.

The yen fell to a record against the euro in June and 6.5 percent versus the dollar from a year earlier, helping Toshiba Corp. and Toyota Motor Corp. ship more chips and cars overseas. Growth in the U.S., Japan's largest export market, probably picked up last quarter from the slowest pace in four years.

``Exports are strong enough to keep leading Japan's economy,'' said Takehiro Sato, chief economist for Japan at Morgan Stanley in Tokyo. ``The pickup in U.S. shipments helped this surprisingly big surplus and signals a recovery'' in demand from the world's biggest economy.

The trade surplus swelled more than the 953 billion yen median estimate of 38 economists surveyed. Imports gained 10.7 percent, less than analysts' 13 percent prediction.

The yen traded at 120.12 per dollar at 1:01 p.m. in Tokyo compared with 120.18 before the report was published.

Exports to the U.S. advanced 6.7 percent to 1.45 trillion yen in June, the Finance Ministry said, after barely rising in May and falling in April for the first time in two years.

Korean Exports

South Korea's economy grew at the fastest pace in 18 months in the second quarter, the country's central bank said today, after export growth almost doubled.

The U.S. economy expanded an annual 3.2 percent in the second quarter, the most in more than a year, economists expect a report to show this week. Higher U.S. demand is helping Toyota close in on General Motors Corp. as the world's largest automaker. Toyota said last week sales in the first six months of the year rose 8 percent to a record 4.72 million vehicles.

Toshiba, Japan's largest chipmaker, said this month sales at its semiconductor group will rise 54 percent in the next four years on demand for memory chips used to store songs and video.

``With demand already strong in Asia and Europe, the rebound in U.S. growth is a positive for exporters,'' said Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``Exports probably did pretty well in the second quarter.''

China, Europe

Shipments to China surged 22.6 percent to a record 1.13 trillion yen and exports to Asia gained 15.8 percent, today's report showed. China's economy grew at the fastest pace in 12 years last quarter.

Exports to the European Union climbed 16.3 percent to 1.08 trillion yen, the second highest on record, buoyed by a weaker currency. The yen fell to a record low against the euro in June, trading at an average 164.66 compared with 145.24 in the same month a year earlier, Bloomberg data show.

``The yen's weakness against the euro is the main factor behind growth in exports to Europe,'' Morgan Stanley's Sato said.

Half of Japan's exports were traded in dollars in the first half of 2007 compared with 38 percent in yen and 8.7 percent in euros, the ministry said.

Export volumes, which don't take into account price and currency fluctuations, rose 6.1 percent in June, lagging the increase in shipments by value, the report showed.

U.S. Housing Concern

Concern remains that a slump in the U.S. housing market may spread to the rest of the economy, crimping demand for Japanese goods. Japan's stocks fell today and the yen gained for a fourth day against the dollar, as investors shunned riskier assets on concern the subprime loan problem is slowing U.S. growth.

The yen's 3.4 percent rebound from a 4 1/2-year low on June 22 could erode the local-currency value of exporters' overseas sales.

Today's data will be used to calculate the net-export component of second-quarter gross domestic product figures for release on Aug. 13. Net exports, a measure of the d...


Bloomberg
7/25/2007 6:50:04 AM