Japan's exports, already leading its economic recovery, received a boost in January from a late rush through customs in Asia ahead of the Lunar New Year holidays, pushing up the country's trade surplus. The surplus rose a whopping 393 percent from a year earlier to 507.1 billion yen ($4.74 billion), Ministry of Finance data showed on Monday, far outpacing a consensus forecast of around 115 billion yen. Exports rose 11.3 percent from the same month a year earlier and 0.9 percent from a month earlier, seasonally adjusted, while imports gained 0.8 percent on the year and 1.8 percent on the month. While few economists doubted that exports were booming due to a strong appetite for Japanese goods in the U.S. and Asia, most thought the January figures were affected by an earlier Lunar New Year holiday than the previous year.
"The figures are distorted by a last-minute surge in exports to countries where the Lunar New Year is a major holiday," said Takehiro Sato, an economist at Morgan Stanley. He noted that Finance Ministry figures for the first 10 days and the first 20 days of January had shown a trade deficit, suggesting the bulk of exports were logged in the final 10 days. Sato said the biggest message from the January data was how big an impact Asia has on Japan's gradually recovering economy. "Asia has become a major direct destination for Japanese exports, partly because a lot of Japanese exports to the United States go through production processes in the region," he said. "So the trade figures are more liable to fluctuate wildly when we have things like the Lunar New Year." Nevertheless, the strong figures were good news for the economy, indicating that the strength it showed in the last three months of last year may have continued into 2004.
YEN RISE OFFSET
They also indicated that demand was strong enough to offset the recent strength of the yen against the U.S. dollar that had threatened to make Japanese goods more expensive. "After the gains in the fourth quarter, we still have some positive momentum in the beginning of the year, said Ryo Hino, an economist at JP Morgan. "So against the backdrop of expectations that we are going to see a slowdown in the first quarter, this is pretty good news." Data last week showed Japan's economy grew at an annualised seven percent in the last three months of 2003, the fastest pace in 13 years and outpacing the four percent of the United States in the same period. Exports to China in January rose 33.8 percent from a year earlier to 496.21 billion yen, helped by demand for machinery and chemical products as well as for electronic parts for Japanese companies' factories in China. Japan's trade surplus with the United States, its largest single trading partner, rose for the first time in 13 months as its ban on U.S. beef pushed imports down 13 percent, outpacing a 5.4 percent fall in exports. Japan banned imports of U.S. beef in December following a case of the deadly BSE cattle disease in Washington state. Meat imports from the U.S. fell 48 percent in January.
Overall growth in imports in January was slowed by a decline in demand for liquefied natural gas and oil products as Japan's warm winter meant inventories remained high, the ministry said. Most economists said exports would continue to act as the main pillar of the economy for the rest of the year. Although corporate profits are improving, firms are still cutting costs. With workers worried about salaries and the prospect of losing their jobs, personal spending is expected to stay weak for a while yet. "The main story is that as long as exports are strong, the Japanese economy will keep recovering," said Peter Morgan, senior economist at HSBC Securities Japan. ($1=107.00 yen)//