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Japan Exports Rise as Weak Yen Helps; Business Mood Up

Wednesday, 17 Apr 2013 | 8:47 PM ET

Japanese exports picked up in March from a year earlier, beating forecasts and offering hope that a weaker yen is starting to support a slow upturn in the export-reliant economy as business confidence continues to improve.

Ministry of Finance data showed exports rose 1.1 percent in March from a year earlier, against a 0.4 percent gain expected by economists in a Reuters poll, after a 2.9 percent drop in February.

For the fiscal year to March 2013, Japan logged a record trade deficit of 8.17 trillion yen ($83.7 billion), reflecting a slump in global demand and higher fuel import costs.

The figures showed exports to the United States jumped 7.0 percent from a year earlier, but shipments to China fell 2.5 percent.

(Read More: US Warns Japan Not To Hold Down the Yen)

Separately, the monthly Reuters Tankan survey showed manufacturers' sentiment improved for a fifth successive month in April, although pessimists still slightly outnumber optimists.

"The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports, while the recovery in the world economy, particularly China, is tepid," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

"We'll need to wait at least until around summer before the weaker yen enhances price competitiveness of Japanese products abroad to boost exports."

The yen fell to a four-year low after the Bank of Japan unleashed a massive $1.4 trillion stimulus programme this month, enacting a key part of Prime Minister Shinzo Abe's push for aggressive policy to end deflation and revive the economy.

Analysts say it takes time for the yen's slide to boost exports while it immediately boosts import costs, weakening the trade balance. Still, the weak yen is boosting business morale.

(Read More: Fund Managers Say Goodbye China, Hello Japan)

The monthly Reuters poll, which is closely correlated with the Bank of Japan's quarterly tankan corporate survey, showed the manufacturers' sentiment index rose by seven points to minus 4 in April, and was expected to improve to plus 10 in July.

Less Pessimistic

A negative reading in the Reuters Tankan survey means there are still more pessimists than optimists, but the poll of 400 firms taken March 29 - April 15, of which 260 responded, shows the gap has been steadily narrowing since the end of 2012.

"The Reuters Tankan underlines rising expectations among Japanese firms for a brighter outlook, although the real economy is lagging behind those expectations," Minami said.

(Read More: Sliding Yen Could Herald New Asian Currency Crisis: Albert Edwards)

The trade data showed imports were up 5.5 percent in the year to March, a fifth consecutive gain, against a 6.3 percent rise expected, leaving the trade balance in the red for nine months in a row, the longest such run since 1979-1980 when the country was hit by surging oil prices.

The 362.4 billion yen deficit for March compared with 493.8 billion yen deficit expected by economists.

For decades, Japan had accumulated solid trade surpluses, but its trade balance swung to deficit in 2011 and 2012 after the Fukushima crisis two years ago forced the nation to idle its nuclear power plants and import more oil and gas.