Japan exports rise at fastest in 3 years, weak yen paying off
Japan's exports jumped in July from a year earlier at the fastest pace almost three years in a sign that a recovery in overseas demand and the often-touted benefits of a weak yen are finally starting to take hold.
However, the trade balance was in deficit for the 13th consecutive month in July, as imports surged by the most in three years due to the weak yen and rising oil prices, that have made Japan's energy imports ever more expensive.
Almost all of Japan's nuclear reactors have remained idle since the Fukushima disaster in March 2011, putting extra pressure on the energy import bill.
The 12.2 percent increase in exports in the year to July was less than the median estimate for a 13.1 percent annual increase, but economists took the data positively as exports to the United States, China and Europe all accelerated.
"We expect exports to continue to recover," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.
Imports rose 19.6 percent in July from a year ago, the fastest gain since June 2010 and more than the median estimate for a 15.4 percent annual increase.
The July trade deficit was the third largest on record at 1.02 trillion yen ($10.5 billion), overshooting the median estimate for a 785.6 billion yen deficit.
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A depreciation of around 20 percent in the yen since November, when markets began expecting the aggressive easing of monetary policy that the Bank of Japan undertook in April, has boosted the competitiveness of the export-focussed economy.
Exports to the United States, which bought the most Japanese goods in July, rose an annual 18.4 percent, faster than a 14.6 percent increase in the year to June, finance ministry data released on Monday showed.
Exports to China, Japan's largest trading partner, rose 9.5 percent year on year in July, more than a 4.7 percent annual increase in June in a sign that China's economic slowdown is easing.
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Exports to the European Union rose 16.6 percent in July from a year ago, faster than an 8.6 percent increase in June, in a further sign that the region's sovereign crisis is abating.
Export volume rose 1.8 percent in July from a year ago, the first increase in 14 months, offering more evidence that overseas demand could strengthen further.
"The details are encouraging because you can see that exports to Japan's main markets are bouncing back," Muto said.