Bloomberg News

Japan’s Exports Increase, Withstanding Signs of a Global Slump

October 24, 2011

Oct. 24 (Bloomberg) -- Japan’s exports rose more than expected last month, a sign shipments withstood weakening global growth before the yen climbed to a postwar high that prompted officials to pledge “decisive” steps today to stem its gains.

Shipments increased 2.4 percent in September from a year earlier as demand for cars and auto parts rose, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg was for a 1 percent increase after a 2.8 percent gain in August. The nation posted a trade surplus of 300 billion yen ($3.9 billion).

Exports have rebounded as companies including Toyota Motor Corp. restored production after the March 11 earthquake and tsunami damaged factories and caused parts and power shortages. Japanese Finance Minister Jun Azumi and Chief Cabinet Secretary Osamu Fujimura both signaled today Japan is ready to intervene in the currency market to stop a yen appreciation to post-World War II highs that may stunt shipments as overseas demand slows.

“The report provides some relief as it indicates that exports aren’t plunging,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. Still, “we can’t be bullish about the outlook of exports given slowdowns in the U.S., Europe and emerging nations such as China.”

The yen traded at 76.24 against the dollar at 4:22 p.m. in Tokyo. It rose to a postwar record of 75.82 on Oct. 21, and has strengthened more than 6 percent against its U.S. counterpart this year. The Nikkei 225 Stock Average advanced 1.9 percent as commodity producers gained on higher oil and metal prices.

‘Extremely Unfortunate’

Azumi said today that the yen’s climb to a new postwar high was “extremely unfortunate.” Azumi told reporters in Tokyo he will take “decisive” action in the market if needed, and said the yen’s moves are “clearly speculative and don’t reflect economic fundamentals at all.” Fujimura also said Japan is ready to take decisive steps in the market.

Exports rose 2 percent from August. Helping push up overall shipments were a 4.9 percent increase in car exports and an 11.5 percent gain in auto part sales, the report showed. Exports to China rose 2.7 percent.

Imports advanced 12.1 percent from a year earlier as purchases of petroleum and liquefied natural gas gained, according to the report.

Intervention Call

Japan needs to consider unilateral intervention to stem the yen’s advance, Hiromasa Yonekura, head of the business lobby Nippon Keidanren, said at a press conference in Tokyo today. Policy makers should also consider extending loans to small and large enterprises, he said.

Toyota, Asia’s biggest carmaker, reported an increase in global vehicle output for the first time in 12 months in August. At the same time, the automaker loses 34 billion yen in operating profit for every 1 yen appreciation against the dollar.

Prime Minister Yoshihiko Noda’s cabinet last week approved a 12.1 trillion yen spending plan to rebuild after the March disaster. The package includes 2 trillion yen to help companies cope with the higher yen, with subsidies planned for building plants in Japan and hiring workers.

Recent Japanese economic data have suggested that the currency appreciation and a global slowdown are taking their toll on the world’s third-largest economy. Industrial output, retail sales and exports were all weaker than economist forecasts in August.

Goldman Sachs Group Inc. this month cut its forecast for Japan’s economic growth to 2.1 percent in the fiscal year starting April 2012 from of an earlier estimate of 2.5 percent, in line with its prediction of a slower global expansion.

The International Monetary Fund last month lowered its forecast for global economic growth this year to 4 percent from 4.3 percent. China’s expansion moderated to 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009.

--With assistance from Misato Watanabe, Takashi Hirokawa, Kyoko Shimodoi and Takashi Amano in Tokyo. Editors: Ken McCallum, Lily Nonomiya

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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