Japanese Imports Dwindle as Consumption Shrinks

Japan's trade balance swung into surplus in February for the first time in five months, as a sharp fall in imports offset a record fall in exports for the month.

But the data provide little comfort to an economy mired in the worst recession since the 1974 oil shocks as it showed both domestic consumption and overseas demand crumbling under the weight of the global slowdown.

Katsumi Kasahara / AP

Exports halved from a year earlier, with shipments to the United States and Europe falling at record rates.

"The decline in imports suggest weakening demand in Japan," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"Exports to the United States continued to fall sharply. As it will be difficult to know whether the U.S. government's stimulus measures would show positive results in the economy until this summer, I do not see a silver lining for exports to the U.S. for now."

Japan had a trade surplus of 82.4 billion yen ($841.6 million) in February, according to Ministry of Finance data released on Wednesday, versus economists' forecasts for a deficit of 10.9 billion yen. 

The trade surplus comes after Japan posted a record deficit in January, when New Year holidays affected exports.

Imports fell 43.0 percent from a year earlier, more than an expected 38.5 percent decline, due also to lower oil prices and a stronger yen decreasing the value of imported goods.

Exports dived a record 49.4 percent in February from a year earlier, larger than the median forecast for a 47.1 percent decline, as global demand for Japanese goods such as cars and electronics evaporates amid a deepening financial crisis.

The Nikkei 225 Average fell as bank shares declined following a rally sparked by a U.S. plan to buy toxic assets from its banks.

Japan's exports to the U.S. fell 58.4 percent in February from a year earlier, the largest decline ever, the government data showed. 

Shipments to the European Union fell a record 54.7 percent while exports to Asia declined 46.3 percent.

Waning domestic consumption and overseas demand underlines the pessimism of companies in the world's second-largest economy as they lay off workers and slash capital expenditure.

The Bank of Japan's closely watched tankan survey due on April 1 will likely show sentiment among big manufacturers deteriorated to minus 55 in the first quarter, the lowest in almost 34 years.

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