Japan's Exports Rise Faster Than Economists Estimated
A China Ocean Shipping Group Co. (Cosco) shipping container is loaded onto a container ship at a container terminal in Tokyo. Photographer: Kiyoshi Ota/Bloomberg
Japan’s exports rose faster than economists estimated, sustaining a boost to the recovery that may diminish as global growth cools and the yen strengthens.
Shipments abroad advanced 27.7 percent in June from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg News was for 23.5 percent. From a month earlier, exports fell 1.8 percent.
While exports have climbed for seven straight months, June’s gain was the weakest this year as demand from China and Europe waned. The yen reached a seven-month high against the dollar this month, prompting officials including Trade Minister Masayuki Naoshima to warn that its rise may hurt the economy.
“Given that exports are the sole driver of Japan’s moderate economic recovery, the expansion is poised to slow in the third and the four quarters,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research in Tokyo. “The yen’s gain is also posing a threat to exporters’ profits.”
Japan’s currency gained 8 percent versus the dollar and 12 percent per euro in the past three months. It rose to 87.13 per dollar at 5:12 p.m. in Tokyo from 87.62 before the report. The Nikkei 225 Stock Average climbed 0.8 percent to 9,503.66.
Imports advanced 26.1 percent in June from a year earlier, leaving a trade surplus of 687 billion yen ($7.8 billion), 41.1 percent higher than the same month in 2009, today’s data showed.
The higher local currency threatens to erode the value of earnings of exporters such as Toyota Motor Corp. Toyota estimates annual operating profit is reduced by 30 billion yen when the currency rises 1 yen against the dollar.
‘Appreciated Too Much’
“The yen has appreciated too much,” Koji Miyahara, chairman of shipping company Nippon Yusen K.K., said last week. “I’m hoping the yen will depreciate to a range of 95 to 100 to the dollar as soon as possible.”
Japanese exporters’ currency woes are in contrast with their rivals in South Korea, where a weaker won helped Samsung Electronics Co. and Hynix Semiconductor Inc. post record earnings in the second quarter. South Korea grew 1.5 percent in the second quarter from the previous three months, a report showed today, faster than the median estimate of economists.
Nomura Holdings Inc., Japan’s biggest brokerage, abandoned its recommendation for an “overweight” position in Japanese shares, seeing reduced momentum for earnings and weaker economic-growth prospects. “The recovery in Japanese earnings is already beginning to lose momentum,” Nomura analysts including Ian Scott wrote in an e-mailed report dated July 23.
Slower Expansion
Japan’s economic growth probably slowed to an annual 1.7 percent rate in the second quarter from 5 percent in the first three months of 2010, according to the median estimate of 11 economists surveyed by Bloomberg News.
Growth is moderating in the U.S. and China, Japan’s biggest markets. China’s expansion cooled to 10.3 percent in the second quarter. In the U.S., growth eased to an annual 2.5 percent pace in the same period, according to the median estimate of economists surveyed ahead of figures due this week. In Europe, growth is at risk from government spending cuts to stem the region’s sovereign debt crisis.
Shipments to China climbed 22 percent in June from a year earlier, moderating from 25.3 percent in May, today’s report showed. Exports to the U.S. gained 21.1 percent, more than the previous month’s 17.7 percent. Shipments to Europe increased 9 percent, about half the pace of May’s 17.4 percent.
Yamaha Motor Co., the world’s second-largest motorcycle maker, said this month that sales in North America and Europe may fall twice as much as forecast.
Recovery Intact
Still, economists say the slowdown abroad is unlikely to derail Japan’s recovery. The Finance Ministry’s regional chiefs raised their assessment of the economy today for a second quarter, saying it is “picking up steadily at a slow pace, although it remains severe.”
“Even though external demand will likely lose momentum, it doesn’t mean Japan will fall back into a recession,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. “But the downside risks could have a bigger impact on Japan’s economy than the upside risks do.”
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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