Japan's trade surplus widened a greater-than-expected 15 percent in February and exports were the third highest on record, boosting optimism that an economic recovery will be sustained. The seasonally adjusted trade surplus was 1.25 trillion yen ($11.8 billion), compared with the 1.1 trillion yen median forecast of 14 economists. Exports fell 1.4 percent to 4.82 trillion yen, and imports fell 6 percent to 3.57 trillion yen, the Ministry of Finance said in Tokyo. Companies including NEC Corp., Japan's biggest mobile-phone maker, have been boosting export volumes and expanding in China, helping to mitigate the impact on their sales of a strengthening yen. Japan had a trade surplus with China for the first time in almost a decade, based on unadjusted figures in today's report.
``This year will be a very strong year for the technology industry, especially in the first half,'' Hajime Sasaki, NEC's chairman and head of the Japan Electronics and Information Technology Industries Association, said yesterday at a press conference. ``We can expect growing demand from China and East Asia.'' The yen rose to 105.81 to the dollar at 3:36 p.m. in Tokyo from 106.22 late yesterday in New York. The currency has gained 5.6 percent against the dollar in the past six months, reducing the revenue of exporters when converted into yen. The Nikkei 225 Stock Average rose 1.5 percent to 11,530.91 at the 3 p.m. close of trading, led by Kyocera Corp. and other companies that ship goods to China. Exporters have led the Nikkei's 51 percent rally from a two-decade low last April 28.
Recovery Spreading
``The fact that exports will lead Japan's economic growth will be unchanged for some time,'' Yoshimasa Maruyama, an economist at Mizuho Research Institute, said after the report was released. Net exports accounted for a quarter of Japan's 6.4 percent annual pace of growth in the three months through Dec. 31, the fastest in 13 years. Exporters are benefiting from rising consumer spending in China and the U.S., Japan's two biggest overseas markets. Export growth is spreading to the rest of the world's second- largest economy as consumer confidence gets a boost from the stock market rally and a drop in unemployment to 5 percent in January from 5.5 percent a year earlier. Service industries grew in January at the fastest pace in almost four years, a report this week showed, as consumers spent more. Imports fell in February as a weaker dollar reduced the yen costs of the oil Japan buys overseas and the nation cut off imports of U.S. beef, Maruyama said.
Handset Sales
From a year earlier, Japan's trade surplus rose to 1.41 trillion yen in February, the highest in more than five years. Japan had a trade surplus with China for the first time since March 1994, based on unadjusted figures. Exports rose 10.3 percent from a year earlier, led by ships as well as components for digital cameras, cell phones and video equipment. Imports fell 1 percent, led by crude oil and liquefied natural gas. Japan has sought to protect the export-led recovery by curbing the yen's gains against the dollar through sales of the Japanese currency. The Bank of Japan, at the behest of the Ministry of Finance, sold a record 20.5 trillion yen last year. Rising global demand is helping Japanese exporters overcome the effects of a stronger yen. Exports by volume have risen every month but one in the past 23 months, and gained 11.9 percent in February from a year earlier.
`Huge Gains'
``Exports are making huge gains and industrial production is also growing,'' Bank of Japan Governor Toshihiko Fukui said in the lower house of parliament in Tokyo on Tuesday. ``The economy will continue to grow at a steady pace.'' NEC aims to sell between 5 million and 6 million handsets in 2005, compared with 1 million units last year. Canon Inc., the world's biggest seller of digital cameras, said profit will rise 26 percent to a record 90 billion yen in the three months ending March 31 on rising demand for its IXY series cameras and photocopiers. TDK Corp., Advantest Corp., and other exporters have spurred a 52 percent rally in the Nikkei 225 Stock Average since the index dropped to a 20-year low in April. Slower growth in the U.S. and China might dent the pace of Japanese exports and economic growth, said Kiichi Murashima, senior economist at Nikko Citigroup Ltd.
Chinese Premier Wen Jiabao said this month that nation's growth will probably slow to about 7 percent this year from 9.1 percent in 2003 as the government curbs lending and investment. Japan's exports to China rose 14.9 percent to 590 billion yen, and imports from China rose 5.2 percent to 576 billion yen in February from a year earlier. The trade surplus with China may have been exaggerated because China reduced export-related rebates in January to an average 13 percent of tax bills from as much as 17 percent last year, said Seiji Adachi, an economist at Credit Suisse First Boston Ltd. China's exports grew 51 percent from a year earlier in December, the fastest pace in more than eight years, as companies rushed shipments before tax rebates were cut. That compared with a 29 percent gain in exports in the two months to February. ///www.bloomberg.com