Japan’s Export Slump Grinds On Despite Better Tech Shipments

25-Jan-2020 Intellasia | Bloomberg | 6:02 AM Print This Post

Japanese exports dropped more than expected in December, with the shipments slump dragging on for a 13th month despite recent signs of green shoots in global manufacturing.

The value of shipments overseas fell 6.3 percent from a year earlier, weighed down by sliding exports of cars and auto parts, Ministry of Finance data showed Thursday. The result undershot the estimates of all 28 analysts surveyed by Bloomberg. The median forecast was for a 4.3 percent decline. December’s drop in overall exports extended the longest stretch of declines since 2016.

Still, the report also showed strong gains in shipments of semiconductor-making equipment, adding to evidence of a bottoming of the global tech cycle. That’s a positive for Japan’s outlook, even if economists expect a recovery in the overall figure to be slow. Exports to China, the country’s single biggest overseas market, also inched up for the first time in 10 months.

Key Insights

The monthly data cap a miserable year for Japanese shipments abroad. Exports in 2019 fell 5.6 percent for the first drop in three years.The ongoing drop in exports adds to headwinds facing a Japanese economy forecast to have shrunk an annualised 3.7 percent in the fourth quarter as domestic factors, including typhoon damage and a hike in the sales tax, hit growth.Still, accelerating gains in shipments of chip-making equipment, which rose 25.8 percent in December, could indicate a turnaround in the tech industry, whose yearlong slump has been a large factor in Japan’s trade woes.”The bottoming out of the adjustments in the IT sector is a positive factor and that should support a recovery,” said Barclays economist Kazuma Maeda, who also said a clear rebound would take time.The phase-one trade agreement signed this month between the US-and China should also brighten the outlook for shipments in 2020, though tensions could flare up again.In the near-term, there’s also less onus now on Japan’s exports to support growth since the Abe administration last month unveiled $120 billion in economic stimulus measures. The package was a big reason the Bank of Japan this week raised its growth forecast for the coming fiscal year, though it warned that overseas risks still need careful monitoring.

What Bloomberg’s Economist Says

“The phase-one trade deal is positive, in that it could help lift demand from China. Without a stronger performance in the US, though, exports are likely to remain sluggish overall..”

Yuki Masujima, economist

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Imports slid 4.9 percent in December, compared with economists’ median estimate for a 3.2 percent drop.The trade balance was a 152.5 billion yen deficit, roughly in line with analysts’ forecasts.Exports to the US dropped 14.9%, while those to Europe fell 5.6%.Car shipments slid 11.8%; auto parts declined 10.9%.On the positive side, shipments to China edged up 0.8%, led by a near 60 percent surge in chip equipment to the market.Overall shipments of semiconductor-making equipment rose 25.8%, much better than the average double-digit declines of April-September. Chip exports increased by 2.6%.



Category: Japan

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