22 Oct 2009
Oct. 22 (Bloomberg) -- Japan's exports fell at the slowest pace in 10 months in September as stimulus spending in China drove demand for the nation's cars and machinery.Shipments abroad dropped 30.7 percent from a year earlier, compared with a 36 percent decline in August, the Finance Ministry said today in Tokyo. Exports to China, Japan's biggest market, fell 13.8 percent, half the pace of the previous month.
China said today that its economy expanded at the fastest pace in a year last quarter, growth that's spurring sales for Japanese manufacturers including Mazda Motor Corp. and Komatsu Ltd. Even so, Japan's trade recovery may be curtailed by a yen that's gained against all 16 major currencies this year, making exporters' products more expensive and eroding the value of their profits earned abroad.
"The stimulus effects and the rebuilding of inventories in Asia, especially China, are helping Japanese exports," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. "But the stronger yen is putting Japan at a disadvantage" compared with its Asian rivals like South Korea, he said.
Imports slid 36.9 percent, leaving a trade surplus of 520.6 billion yen ($5.7 billion), the ministry said. From a month earlier, exports fell 0.8 percent.
The yen traded at 90.96 per dollar at 11:41 a.m. in Tokyo from 90.80 before the report. Japan's currency averaged 14 percent higher that the dollar in September compared with the same month in 2008, Bloomberg data show. The Nikkei 225 Stock Average lost 1.2 percent, paring the year's gains to 15 percent.
Asian Shipments
Shipments to Asia slid 22.2 percent from a year earlier after a 30.6 percent decline in August. Sales to the U.S. dropped 34.1 percent, little changed from a month earlier. Exports to Europe slumped 38.6 percent.
China's economy expanded 8.9 percent in the third quarter from a year earlier, the statistics bureau said in Beijing, as the country's 4 trillion yuan ($586 billion) stimulus plan and record lending growth helped lead the world out of recession.
Mazda today said it sold a record 91,000 vehicles in China in the six months through September. Honda Motor Co. boosted Chinese sales 27 percent last month.
Demand for construction equipment in China helped Komatsu increase its operating profit by about 25 percent last quarter versus the previous period, the Nikkei newspaper reported this week. Komatsu reports earnings Oct. 29.
Japan's exports are declining at a slower pace when measured by volume. The ministry's index of trade volume, which strips out the effect of currency fluctuations, showed shipments abroad fell 21.8 percent in September from a year ago.
Steel Exports
The report also showed the volume of Japanese steel exports rose 4.4 percent, while in yen terms they slid 44.3 percent, reflecting price cuts and the currency's appreciation.
While Japan's trade revival has fueled six months of gains in industrial production, a third of the country's factory capacity remains idle in the wake of the worst postwar recession.
"The global situation has improved and that's reflected in the pickup in global export demand after having fallen off so sharply at the end of last year," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. "But remember we still have a ways to go before we recover to pre-crisis levels."
South Korean and Taiwanese exporters are enjoying a faster recovery than Japan. Korean exports fell 6.6 percent in September, easing from 20.9 percent in August, and Taiwan's slid 12.7 percent, half the pace of the previous month.
‘Big Impact'
The yen's gain is prompting Honda and Toyota Motor Corp. to consider increasing overseas output to regain market share lost to Korean rivals such as Hyundai Motor Co.
The currency's rise may "have a big impact on Japanese production," Honda's President Takanobu Ito said at the Tokyo Motor Show yesterday. "We must think about producing overseas what is now being produced in Japan," Toyota's Executive Vice President Takeshi Uchiyamada said.
Another reason why Japan's trade rebound has lagged behind others in Asia is because it concentrates on producing machinery used in factories, sales of which typically pick up in the later stages of a recovery when businesses are investing, said economist Masamichi Adachi.
"Demand for capital goods is always weak at the beginning of a recovery. These goods aren't produced by Taiwan or Korea. They're made by Japan," said Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. "By year end, I think we'll be able to say that shipments of capital goods are much better."
