Global| Oct 25 2006Japan's Trade Accounts Benefit from Lower Oil Prices and Rising Exports
Summary
A week ago, we wrote here about further deterioration in trade accounts in Europe for August as energy costs continued to raise import values. We called this "Old News", since we knew already that petroleum prices had already started [...]
A week ago, we wrote here about further deterioration in trade accounts in Europe for August as energy costs continued to raise import values. We called this "Old News", since we knew already that petroleum prices had already started to drop in September. Sure enough, in today's report of Japan's trade for September, some improvement is evident. The trade surplus rose to ¥1.014 trillion from ¥949 billion in September 2005. Imports were still up, rising 16.9% from a year ago to ¥5.818 trillion. But within this total, "mineral fuels" had their smallest year-on-year increase, 18.2%, since July 2004. In this heavy oil importing nation, mineral fuels peaked at a 72.7% yearly surge in February 2006. 
News services today highlight strength in exports, especially motor vehicles, as a reason for the better trade surplus, and this is also the case. On the month, transportation equipment rose 19.9%, yielding a third successive month of 20%-plus yearly increases. A good many of the vehicle shipments head for the US, and the surplus with the US increased to ¥913 billion in September from ¥711 billion a year ago. 
One other point in Japan's favor is a renewed acceleration of exports to China. After a significant slowdown in early and mid-2005, Japan's shipments there have also seen a sustained period of year-on-year growth around 20%. These gains, while not erasing Japan's trade deficit with China, have kept it range-bound near ¥200 billion monthly for the last five months. These developments with the US and China help emphasize that trade relations can be improved by gains in exports, not only with restraints on imports.
| Japan, Bil.¥ | Sept 2006 | Aug 2006 | July 2006 | Sept 2005 | Monthly Averages|||
|---|---|---|---|---|---|---|---|
| 2005 | 2004 | 2003 | |||||
| Trade Balance, NSA | 1014 | 196 | 858 | 949 | 726 | 996 | 849 |
| Trade Balance, SA | 420 | 661 | 757 | 642 | |||
| Exports, SA* | 6360 | 6435 | 6331 | 5592 | 5471 | 5097 | 4546 |
| % Change* | 3.2 | 0.2 | 1.3 | 14.2 | 7.3 | 12.1 | 4.7 |
| Imports, SA* | 5940 | 5774 | 5574 | 4951 | 4746 | 4101 | 3697 |
| % Change* | 0.6 | 4.3 | -6.9 | 16.8 | 15.7 | 10.9 | 5.1 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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