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JPY: Real exports remain on upward trajectory – Nomura

FXStreet (Delhi) – Research Team at Nomura, notes that there is a shift to nominal trade surplus (original series) from deficit in Japan.

Key Quotes

Trade balance (original series) much higher than market consensus forecast: According to Ministry of Finance trade statistics, nominal exports in October 2015 were down 2.1% y-y, nearly level with the consensus (Bloomberg survey median) forecast for contraction of 2.0%. Nominal imports fell 13.4%, far weaker than the consensus for a decline of 8.6%. As a result, the trade balance (original series) came to a surplus of ¥111.5bn, much higher than the consensus forecast for a trade deficit of ¥246.3bn.

Real exports down slightly m-m in October but up compared with the Jul-Sep average: Based on the Bank of Japan's export and import price data, real exports declined 0.4% m-m in October, turning down from an increase of 2.6% in September. However, considering the large increase in September, we see no need for excessive pessimism over the slight m-m decline in October.

Amid concerns about an economic slowdown in China, real exports rose in September and October after having fallen for five straight months through August. Transportation equipment exports were firm and general machinery exports also rose in October. Based on Japanese exports to China, it would appear that China's economy is bottoming.

Real imports fell sharply in October but this may not indicate a decline in demand in Japan: Real imports fell 3.1% m-m in October, down from an increase of 4.0% in September. Looking at the underlying trend excluding mineral fuel imports, real imports were flat m-m in October and higher than the Jul-Sep average. As a result, we do not think the October data necessarily indicate a drop in demand in Japan.”

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