Japan June Trade Surplus Larger than Expected

Japan's trade surplus widened 66.5 percent to JPY 721.4 billion in June of 2018 from JPY 433.2 billion a year earlier and far above markets estimates of a JPY 534.2 billion surplus.
Ministry of Finance l Rida | rida@tradingeconomics.com 7/19/2018 5:16:05 AM
In June, exports grew by 6.7 percent year-on-year to JPY 7,052 billion, following a 8.1 percent rise in the previous month and below expectations of  7 percent. Sales of transport equipment advanced 2.7 percent, mainly led by bus & trucks (11.3 percent), and those of machinery went up 8.4 percent, namely power generating machine (15.4 percent) and computers and units (8 percent). Also, exports rose for electrical machinery (8.1 percent), of which semiconductors (9 percent); others (2 percent), mainly driven by photographic supplies (2.9 percent); manufactured goods (9.5 percent), namely iron and steel products (7.2 percent) and non-ferrous metals (19.4 percent); and chemicals (11.6 percent), of which plastic materials (5.3 percent) and organic chemicals (6.2 percent).

Among major trading partners, sales to Asia rose 8.6 percent, mainly to China (11. percent), Taiwan (5.9 percent), Thailand (15 percent) and Singapore (2.9 percent), while those to Hong Kong (-0.6 percent), South Korea (-4.1 percent) fell. Also, exports went up to the Western European countries (5.4 percent), mainly Germany (14.5 percent); the EU countries (9.3 percent); the Middle East (6.5 percent); and Australia (18.7 percent). In contrast, sales to the US declined by 0.9 percent, the first drop in 17 months, amid worsening trade tensions, with shipments decreasing for cars (-12 percent), semiconductor manufacturing equipment (-40.2 percent) and aircraft (-10.4 percent).

Imports went up much softer at 2.5 percent to JPY 6,330 billion, after a 14 percent gain in May and missing consensus of a 5.3 percent rise. Purchases of mineral fuels rose by 9.3 percent, namely petroleum (20.2 percent), and those of others  expanded 2.4 percent), of which clothing and accessories (9.1 percent), and scientific, optical instruments (2 percent). In addition, imports went up for manufactured goods (9.4 percent), of which non-ferrous metals (23.1 percent), iron and steel products (2.3 percent) and manufactures of metals (6.2 percent); parts of motor vehicles (4.4 percent). Purchases of transport equipment increased 5 percent, namely motor vehicles (6.9 percent). On the other hand, imports of electrical machinery dropped by 1.7 percent, in particular semiconductors (-4.6 percent), and those of machinery decreased 4.1 percent, driven by computers and units (-20.1 percent). Also, purchases of chemicals decreased 0.5 percent, namely medical products (-11.2 percent). 

Inbound shipments increased from Asia (1.6 percent), mainly from South Korea (14.8 percent); and Thailand (8.3 percent), while declined from China (-0.6 percent); and Taiwan (-1.7 percent). Also, imports grew from the Western European countries (0.6 percent), mainly from Germany (5.6 percent), and Italy (23.6 percent); the EU countries (5.2 percent); and the Middle East (27 percent). In contrast, purchases from the US declined by 2.1 percent, mainly due to crude oil, aircraft, and coal. Also, imports from  Australia dropped by 9.1 percent.

Considering the first six months 2018, Japan's trade deficit narrowed to JPY 609.9 billion from JPY 1.02 trillion in the same period of the preceding year. 

Japan June Trade Surplus Larger than Expected