Japan Exports Fall at Slower Pace


Japan’s exports fell at the slowest pace in 10 months in September as stimulus spending in China drove demand for the nation’s cars and machinery.

Shipments abroad dropped 30.7 percent from a year earlier, compared with a 36 percent decline in August, the Finance Ministry said in Tokyo. Exports to China, Japan’s biggest market, fell 13.8 percent, half the pace of the previous month.

China’s 4 trillion yuan ($586 billion) in spending on building projects and consumer incentives is spurring sales for manufacturers including Honda Motor Co. and Komatsu Ltd. Even so, the improvement in Japan’s trade performance may be curtailed by a yen that’s gained against all 16 major currencies this year, making exporters’ products more expensive and eroding the value of their profits earned abroad.

Imports slid 36.9 percent, leaving a trade surplus of 520.6 billion yen ($5.7 billion), the ministry said. From a month earlier, exports fell 0.8 percent.

Shipments to Asia slid 22.2 percent after a 30.6 percent decline in August. Sales to the U.S. dropped 34.1 percent, little changed from a month earlier. Exports to Europe slumped 38.6 percent.

Honda boosted September sales in China 27 percent to 59,140 vehicles. Sales of construction equipment in China helped Komatsu increase its operating profit by about 25 percent last quarter versus the previous period, the Nikkei newspaper reported this week. Komatsu reports earnings Oct. 29.

Japan’s exports are declining at a slower pace when measured by volume. The ministry’s index of trade volume, which strips out the effect of currency fluctuations, showed shipments abroad fell 21.8 percent in September from a year ago.

Still, while the revival in demand has fueled six months of gains in industrial production, a third of the country’s factory capacity remains idle in the wake of the worst postwar recession.

South Korean and Taiwanese exporters are enjoying a faster recovery than Japan. Korean exports fell 6.6 percent in September, easing from 20.9 percent in August, and Taiwan’s shipments slid 12.7 percent, half the pace of the previous month.

The yen’s gain is prompting Honda and Toyota Motor Corp. to consider increasing overseas output to regain market share lost to Korean rivals such as Hyundai Motor Co.

The currency’s rise may have a big impact on Japanese production,” Honda’s President Takanobu Ito said at the Tokyo Motor Show yesterday. We must think about producing overseas what is now being produced in Japan,” Toyota’s Executive Vice President Takeshi Uchiyamada said.

Another reason why Japan’s trade rebound has lagged behind others in Asia is because it concentrates on producing machinery used in factories, sales of which typically pick up in the later stages of a recovery when businesses are investing, said economist Masamichi Adachi.


TradingEconomics.com, Bloomberg
10/21/2009 10:39:03 PM