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Japan's exports pick up on improved autos output, imports hit record

Japan's exports pick up on improved autos output, imports hit record

A man in a bicycle drives past containers at an industrial port in Tokyo, Japan, May 22, 2019. (File photo: Reuters/Kim Kyung-Hoon)

TOKYO: Japan's exports sped up in November, as supply constraints eased slightly for the country's big automakers, although imports hit a record on soaring materials costs, which could hurt household consumption.

The trade data came days after the Bank of Japan's quarterly tankan survey showed an improvement in service-sector sentiment, suggesting robust consumption will support the recovery, although the new Omicron variant and rising costs remain downside risks.

Exports climbed 20.5 per cent in November from a year earlier, government data showed on Thursday (Dec 16), the ninth straight month of increase, slightly missing forecasts for a 21.2 per cent gain but well up on a 9.4 per cent rise in the previous month.

Shipments of cars - Japan's no.1 export item - rose 4.1 per cent from a year earlier, marking the first increase in three months, although auto exports to the United States and China decreased year-on-year.

"The jump in exports in November suggests that most supply chain constraints in the automobile sector had already eased last month," said Tom Learmouth, Japan economist at Capital Economics.

"Exports will remain strong over the coming months as motor vehicle exports recover further and external demand for capital goods continues to rise."

Other than cars, growing shipments of steel, semiconductor equipment and chips contributed the most to the increase, a government official said.

Shipments to China, Japan's biggest trade partner, increased 16.0 per cent year-on-year, the data showed.

Imports rose 43.8 per cent year-on-year in November to ¥8.32 trillion (US$72.87 billion), the largest yen amount since comparable data became available in January 1979 and jacked up by a 144.1 per cent rise in fuels such as oil, LNG and coal.

Imports growth accelerated from 26.7 per cent in October and was bigger than economists' forecast of 40.0 per cent.

That brought a trade deficit of ¥954.8 billion, the biggest shortfall since January 2020 and exceeding the median estimate for a ¥675.0 billion deficit.

"While the weak yen has certain benefits such as boosting exporters' competitiveness and inbound tourists' spending, more Japanese manufacturers have shifted production bases offshore and COVID-19 border controls shut out tourists now," said Masato Koike, senior economist at Dai-ichi Life Research Institute.

"Rising costs are weighing on Japan when a weak yen has less impact on increasing sales of goods and services."

The BOJ's latest tankan survey on Monday showed rising raw material costs clouding the corporate and economic outlook. BOJ governor Haruhiko Kuroda said on Wednesday inflation may approach its elusive 2 per cent target.

However, the central bank is unlikely to change its easy monetary policy at its next rate review on Friday.

The world's third-largest economy is expected to post strong growth in October-December after a contraction in the third quarter, as household spending improved on low COVID-19 infections.

Source: Reuters/ng
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