Japan Trade Surplus Surges on Exports of Autos, Steel


Japan's August trade surplus widened to 743.2 billion yen ($6.5 billion), three times higher than economists predicted, as car and steel shipments jumped and import growth slowed.

Exports rose at more than twice the pace of imports, the Finance Ministry said in Tokyo on Tuesday, helping the surplus almost quadruple from a year earlier. The median estimate of 37 economists surveyed by Bloomberg News was for the gap to swell 23 percent to 235.5 billion yen.

Shipments to Europe and Asia rose to records for the month, reflecting increased orders that may help Japan weather a slowdown in the U.S. following the collapse of the subprime mortgage market. Honda Motor Co.'s sales climbed by a third in the first seven months of 2007 as demand from China surged.

``Export demand was solid across all regions,'' said Maiko Noguchi, a senior economist at Daiwa Securities SMBC Co. in Tokyo. ``The subprime impact may materialize in coming months so we need to watch developments closely.''

The yen traded at 115.21 per dollar at 10:13 a.m. in London from 114.57 before the report was published.

Exports climbed 14.5 percent in August, faster than July's 11.8 percent, the ministry said. Economists expected growth in shipments to cool to 10.9 percent. Imports rose 5.7 percent, a third of the pace of the previous month, as purchases of aircraft declined compared with a year earlier.

U.S., Europe

Shipments to the U.S. advanced 4.6 percent in August, accelerating from 1.3 percent. Exports to the European Union climbed 15.6 percent, faster than July's 13.1 percent. Growth in exports to China quickened to 23.8 percent from 20.6 percent.

``Export growth was quite high,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management in Tokyo. ``Still, slower global growth is a risk that needs to be watched closely as well as the impact of the subprime issue.''

Export volumes, which don't take into account price fluctuations, rose 8.2 percent last month, the biggest gain since January, another sign that demand is strong, Muto said.

Honda Motor, Japan's second-largest carmaker, said sales in China surged 44 percent in July from a year earlier. Japan's auto shipments to China jumped 88 percent in August, today's report showed.

Nippon Steel

Nippon Steel Corp., the world's second-biggest maker of the alloy, increased its full-year profit forecast to a record 365 billion yen this month as rising demand from shipbuilders and automakers drives gains in prices. The subprime credit rout hasn't dented world demand for steel, the company said Sept. 6.


Bloomberg
9/26/2007 7:59:50 AM