·
Japan's current
account surplus rose ¥611.4 billion in October, according to data
reported December 13 by the Ministry of Finance, reaching a record ¥2,020.1
billion (seasonally adjusted). The
previous record was ¥2,015.1 billion in December 2005.
· The month-to-month increase in the surplus included favorable moves in every segment of the current account. The goods balance increased to ¥852.7 billion from ¥437.2 billion, more than reversing September's shrinkage. Exports rose ¥113.0 billion or 1.9% and imports fell ¥302.5 billion or 5.4%. The merchandise trade data reported earlier indicate that just under half of the fall in imports was in "mineral fuels", including petroleum and natural gas products. Among exports, the strongest items appear to be motor vehicles and metals, as suggested by year/year gains in not-seasonally-adjusted data.
· There is a deficit in
services, but it shrank markedly in October, to ¥122.8 billion from ¥208.5
billion in September. It is
erratic on a monthly basis, but the October reading compares favorably
with an average for all of last year of ¥219.4 billion and with ¥308.3
billion in 2004.
· The balance on income flows grew as well in October, as gains in assets held abroad are bringing in increased portfolio income. The monthly change in October portfolio income was small, just to ¥1,071.0 billion from ¥1,038.4 billion in September, but these are both up from ¥852.4 billion in October a year ago and ¥737.6 billion for all of 2005. Total income includes interest on bank loans, profits from direct investments, and wage income; the October total was ¥1,374.9 billion.
· All together in
Japan's current account performance for October, the balance of trade in
goods showed the largest improvement, but the largest net surplus is in
income. As world capital
markets become more and more integrated and direct investment becomes
more diversified around the world, swings in both goods and income
balances are likely to be wider and more frequent.