Japan’s Trade Deficit Widens on Drop in Car Exports, Oil Imports
Japan Slumps Into a Larger-Than-Expected Deficit
Japan posted a bigger-than-forecast trade deficit in January as auto exports declined and energy import costs enlargened.
Economists cautioned against reading the single month’s figures negatively, noting that global request should support Japanese exports this year.
Key Numbers
- Exports rose 1.Three percent from a year earlier (versus +Five percent estimate).
- Imports climbed for the very first time in two years, by 8.Five percent (versus +Four.8 percent estimate).
- Trade deficit for January was 1.1 trillion yen ($9.6 billion), compared with expectations for a deficit of about 625.9 billion yen. 
Big Picture
After snapping a sustained slump in December, any strength in exports is a welcome boost to Prime Minister Shinzo Abe’s efforts to spur economic growth, and a buttress to corporate profits ahead of the annual spring wage negotiations. Higher commodity prices stemming from OPEC’s decision to cut production last year increase Japan’s import bill, but should help the central bank in its campaign to spur inflation.
A 6.6 percent drop in exports to the U.S. reflected a slide in car sales that underscores the preference of many American consumers for SUVs relative to Japanese sedans, according to the government in Tokyo. This may assist Finance Minister Taro Aso when he gets into bilateral talks on trade and the economy in April with Vice President Mike Pence. The threat of U.S. protectionism remains a large risk for Japan, even after the warm welcome Abe received from President Donald Trump earlier this month.
Economist Takeaways
- The slowdown in exports seen in January is just improvised and there’s no switch to the view that Japan’s economy is driven by outer request while domestic coerces remain powerless, according to Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo.
- “Exports are still on the recovery track,” said Kodama. “The global economy is steadily recovering.”
- Bob Baur, the chief global economist at Principal Global Investors, said on Bloomberg TV that he “wouldn’t get too excited about any one-month number.”
- “Exports were truly good in the fourth quarter,” said Baur. “Imports are better than people think, and that means somebody is buying, which I think is positive in the longer term for Japan.”
The Details
- Exports to the U.S. fell 6.6 percent from a year earlier.
- Shipments to the EU decreased Five.6 percent.
- Sales to China, Japan’s largest trading playmate, climbed Three.1 percent.
- The value of exports of motor vehicle fell 6.7 percent.
- Crude oil imports leaped almost thirty six percent by value, contributing Two.8 percent of the rise in total imports.
- The January data included for the very first time imported shale gas from the U.S.
- Chinese coal imports shoved up prices for the commodity.
- Export volumes declined 0.Three percent.
- Note: Japan tends to have a trade deficit in January due to the lunar fresh year celebrations in some of Japan’s largest trading playmates, such as China and South Korea.
— With assistance by Keiko Ujikane, and Tomoko Sato
Japan s Trade Deficit Widens on Drop in Car Exports, Oil Imports
Japan’s Trade Deficit Widens on Drop in Car Exports, Oil Imports
Japan Slumps Into a Larger-Than-Expected Deficit
Japan posted a bigger-than-forecast trade deficit in January as auto exports declined and energy import costs enlargened.
Economists cautioned against reading the single month’s figures negatively, noting that global request should support Japanese exports this year.
Key Numbers
- Exports rose 1.Three percent from a year earlier (versus +Five percent estimate).
- Imports climbed for the very first time in two years, by 8.Five percent (versus +Four.8 percent estimate).
- Trade deficit for January was 1.1 trillion yen ($9.6 billion), compared with expectations for a deficit of about 625.9 billion yen. 
Big Picture
After snapping a sustained slump in December, any strength in exports is a welcome boost to Prime Minister Shinzo Abe’s efforts to spur economic growth, and a buttress to corporate profits ahead of the annual spring wage negotiations. Higher commodity prices stemming from OPEC’s decision to cut production last year increase Japan’s import bill, but should help the central bank in its campaign to spur inflation.
A 6.6 percent drop in exports to the U.S. reflected a slide in car sales that underscores the preference of many American consumers for SUVs relative to Japanese sedans, according to the government in Tokyo. This may assist Finance Minister Taro Aso when he gets into bilateral talks on trade and the economy in April with Vice President Mike Pence. The threat of U.S. protectionism remains a large risk for Japan, even after the warm welcome Abe received from President Donald Trump earlier this month.
Economist Takeaways
- The slowdown in exports seen in January is just improvised and there’s no switch to the view that Japan’s economy is driven by outer request while domestic compels remain feeble, according to Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo.
- “Exports are still on the recovery track,” said Kodama. “The global economy is steadily recovering.”
- Bob Baur, the chief global economist at Principal Global Investors, said on Bloomberg TV that he “wouldn’t get too excited about any one-month number.”
- “Exports were indeed good in the fourth quarter,” said Baur. “Imports are better than people think, and that means somebody is buying, which I think is positive in the longer term for Japan.”
The Details
- Exports to the U.S. fell 6.6 percent from a year earlier.
- Shipments to the EU decreased Five.6 percent.
- Sales to China, Japan’s largest trading fucking partner, climbed Three.1 percent.
- The value of exports of motor vehicle fell 6.7 percent.
- Crude oil imports leaped almost thirty six percent by value, contributing Two.8 percent of the rise in total imports.
- The January data included for the very first time imported shale gas from the U.S.
- Chinese coal imports shoved up prices for the commodity.
- Export volumes declined 0.Trio percent.
- Note: Japan tends to have a trade deficit in January due to the lunar fresh year celebrations in some of Japan’s largest trading playmates, such as China and South Korea.
— With assistance by Keiko Ujikane, and Tomoko Sato