25 August 2003, 10:17  Japan's July Trade Surplus Rises 3.5 Percent to $6.4 Billion; Exports Gain

Aug. 25 (Bloomberg) -- Japan's trade surplus widened in July as an accelerating U.S. economy drove exports higher for a fourth month and shipments to China rose to a record. The surplus rose a seasonally adjusted 3.5 percent from June to 753.7 billion yen ($6.4 billion), the Ministry of Finance said in Tokyo. Exports, which account for 10 percent of the world's second biggest economy, gained 1.1 percent. The U.S., the destination for more than a quarter of Japan's exports, is buying more Toyota Motor Corp. cars and Canon Inc. cameras as its economy leads a global rebound. Exports helped Japan's economy double its growth rate to 0.6 percent in the second quarter and prompted Canon and other manufacturers to spend more on factories and equipment.
``The future of the economy rests in the hands of exports again,'' said Yoshimasa Maruyama, an economist at Mizuho Research Institute Ltd. ``Growth in the U.S. will help a global recovery, and help Japan's exports to not just the U.S., but Asia as well.'' The U.S. economy expanded at an annual 2.4 percent rate in the second quarter. Growth may accelerate to 3.7 percent in the third quarter, according to the Blue Chip Economic Indicators survey conducted earlier this month. Japan's economy is ``definitely looking up,'' Fujio Mitarai, president of Canon, said last week. The company said today it will invest about 100 billion yen in its chip-making equipment division and expand its workforce 15 percent by March 2006. Imports rose 0.6 percent in July. The median of 13 forecasts in a Bloomberg News survey was for the trade surplus to rise 21 percent to 883.6 billion yen. Exports by volume rose 3.7 percent in July and imports 4.5 percent, the government said.
U.S. Spending
Rising employment, incomes and corporate profits mean U.S. consumers and companies have more money to spend on Japanese computer chips, electronics and vehicles. The trade surplus will widen in coming months, analysts say. Japan's economy grew at an annual 2.3 percent rate in the second quarter, government statistics showed this month. Without adjusting for seasonal variations, exports rose 5.6 percent from a year earlier and imports rose 5.3 percent. That widened the trade surplus 7.3 percent to 799.2 billion yen. Canon, Sharp Corp. and other manufacturers are spending more on factories and equipment to meet rising orders for digital cameras, cell phones and flat panel televisions. A Bank of Japan survey last month showed that Japanese companies plan to spend 5.2 percent more in the fiscal year ending March 31, than they did last year. Sharp plans to increase spending on equipment and new plants by about 13 percent over the next three fiscal years to meet rising demand for mobile phone parts and digital cameras. Tamron Co., which makes camera lenses, raised its profit forecast for the year to Dec. 31 by 46 percent.
Nikkei Rises
Evidence Japan's economy is reviving has helped the benchmark Nikkei 225 Index rise 35 percent since it touched a 20-year low on April 28. That makes it the seventh-best performing index in dollar terms among 62 indexes tracked by Bloomberg. Exports were led by sales of transport equipment, televisions, audio and visual equipment and other electronics, according to the unadjusted data in today's report. The government doesn't give breakdowns for adjusted data. To keep exports competitive, the government and central bank sold a record 9.03 trillion yen in the seven months through July to prevent the yen from rising. Any rise in the yen would make Japanese goods more expensive abroad. The euro has gained 4.2 percent against the dollar this year, while the yen has been little changed at an 0.8 percent gain. The yen was little changed at 117.61 to the dollar at 9:44 a.m. in Tokyo, from 117.54 in late New York Friday.
Domestic Spending
Spending by consumers and businesses at home is also fueling demand for imports, economists say, though it won't outpace the growth in exports. Imports rose 0.6 percent in July, seasonally adjusted, from June, and rose 5.3 percent from a year earlier. ``The gains in capital spending are concentrated only among manufacturers,'' said Seiji Adachi, an economist at Credit Suisse First Boston Ltd. He says capital spending would have to rise about 10 percent in a year to suggest a recovery in the domestic economy. Large manufacturers plan to raise spending by 11.5 percent this fiscal year, compared with a 1 percent increase among large non-manufacturers, the Bank of Japan's Tankan survey showed last month. //www.bloomberg.com

© 1999-2024 Forex EuroClub
All rights reserved