Japan’s Fastest Export Growth in a Year Boosts Outlook

Japan reported the fastest export growth in a year and a smaller-than-expected trade deficit, aiding prospects of a sustained recovery in the world’s third- biggest economy.

Boosted by car exports to the U.S., outbound shipments rose 5.9 percent in March from a year earlier, exceeding the median estimate in a Bloomberg News survey for a 0.2 percent gain. The deficit was 82.6 billion yen ($1 billion), less than the median forecast for a 223.2 billion yen shortfall. Comparisons are distorted by the earthquake in March 2011.

The results support the International Monetary Fund’s estimate earlier this week that Japan’s economy may expand as much as 2 percent this year, boosted by reconstruction spending. Exports have been helped by the yen’s decline after the Bank of Japan boosted monetary stimulus in February, a policy Governor Masaaki Shirakawa said late yesterday in New York he’s “committed” to keeping.

“The key reason for the good result is a solid rebound in exports to the U.S. where cars are selling well,” Yoshimasa Maruyama, chief economist at Itochu Corp. (8001) in Tokyo, said. “Exports to Asia are rebounding, mainly because of the strong recovery in shipping to ASEAN nations.”

The yen strengthened to 81.17 per dollar immediately after the trade data’s release before returning 81.30. The Japanese currency traded at 81.54 per dollar as of 5:40 p.m. in Tokyo.

Inflation Goal

The BOJ set an inflation goal of 1 percent and expanded asset purchases by 10 trillion yen in February. Morgan Stanley MUFG Securities Co., Mizuho Securities Co. and SMBC Nikko Securities Inc. predict the central bank will expand asset purchases at a meeting on April 27 amid pressure from lawmakers for more aggressive action to counter more than a decade of deflation.

“The Bank of Japan (8301) is fully committed to continuing powerful monetary easing through various measures, including maintaining the policy interest rate at practically zero and purchasing financial assets, until the current goal of year-on- year CPI inflation at 1 percent is deemed to be achievable,” Shirakawa said in his New York speech.

Exports to Europe and China slid, while those to the U.S. rose 24 percent, led by motor vehicle shipments. Nippon Yusen K.K. (9101), Japan’s largest shipping line, expects its car-carrying vessels to transport the most vehicles in five years in the 12 months started April 1 as demand surges in North America.

Shipments of electronics to the US were up 25.5 percent.

Japan’s Toyota Motor Corp. (7203), the maker of Prius hybrids, the world’s best-selling gasoline-electric vehicle, on April 5 raised its forecast for 2012 industry-wide U.S. sales of cars and light trucks, citing recovering consumer confidence.

Yen Effect

Among G10 currencies, the yen has declined the most in the past six months against the U.S. dollar, dropping more than 6 percent in that period.

“A weaker yen against the dollar and euro is helping trade competitiveness,” Matthew Circosta, an economist at Moody’s Analytics in Sydney, said before the report. “A synchronized upswing in reconstruction and exports should drive a better second half.”

Lingering concerns about Europe after a surge in bad loans held by Spanish banks ahead of bond sales helped push Asian stocks lower. The MSCI Asia Pacific Index (MXAP) declined 0.1 percent to 124.88 as of 5:32 p.m. in Tokyo. Japanese shares also fell, with the Nikkei 225 Stock Average down almost 1 percent for the day.

Japan’s imports rose 10.5 percent in March from a year earlier as nuclear plant shutdowns swelled the nation’s energy bill, today’s report showed. The nation faces the prospect of a stint without atomic-generated electricity for the first time in more than four decades after closures in the aftermath of last year’s earthquake, tsunami and nuclear crisis.

Brazil Rates

In total, 53 of 54 nuclear reactors have been shut either owing to damage, government order, or mandatory maintenance. The last one running, on the northern island of Hokkaido, goes off- line from May 5.

Brazil cut its benchmark interest rate to a near-record low of 9 percent as slowing inflation creates space for the central bank to continue stimulating growth in Latin America’s biggest economy.

Elsewhere in Asia, New Zealand reported consumer prices rose in the first quarter by less than the central bank forecast, giving Governor Alan Bollard scope to hold interest rates at a record-low. The Philippine central bank kept borrowing costs unchanged today after two consecutive rate cuts.

Hong Kong Jobs

Hong Kong reported that its unemployment rate for March was 3.4 percent, unchanged from a month earlier.

Italy announced that industrial orders fell 2.5 percent in February from the previous month, while Denmark’s statistics office reported a rebound in consumer confidence in April.

Manufacturing in the Philadelphia region probably expanded in April at near the fastest pace in almost a year, economists said before a report by the Federal Reserve Bank of Philadelphia. Sales of previously owned U.S. houses rose 0.7 percent to a 4.62 million annual rate in March, while initial jobless claims fell in the week ended April 14, other reports are forecast to show.

To contact the reporter on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net

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

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