MNI: BOJ Real Export Index Dips In May

The Bank of Japan's real export index fell in May, the first decline in three months, with the dip largely expected by officials at the bank as exports were seen slowing on the back of weaker auto-related output slowed on a shortage of semiconductors, a shortage that could last through June.

Overall exports saw some support for strong orders in the capital goods and IT-related sectors, helped by the ongoing global recovery in business fixed investment and a steady expansion in digital-related demand, but strong upside will be tempered by the global chip shortage.

The real export index fell 0.2% m/m in May after a 2.5% gain in April. The index for the April and May period rose 3.4% q/q over Q1.

STILL STRONG EXPORTS

Exports rose 49.6% y/y in May for the third straight rise and for the highest rise since April 1980 when it rose 51.4%. Imports rose 27.9% y/y for the fourth straight rise after a12.8% gain in April. May's gain came from higher exports of auto parts, machinery and chip-making equipment. Japan posted a deficit of JPY187.1 billion, the first deficit in four months following a surplus of JPY253.1 billion in April.

The auto export gain was mainly due to the base effects of comparing the rate with the previous year -- the trough of the pandemic impact on global economies. Exports of machinery for capital investment overseas rose 40.4% y/y in May following a 40.2% in April.

Exports to China, Japan's largest trading partner, rose 23.6% y/y in May for an 11th straight rise, thanks to strong demand for chip-making equipment, cars and capital goods. Exports of chip-making equipment to China rose 63.9% y/y in May and exports of automobiles rose 42.9%.

Exports to the U.S. surged 87.9% in May for the third straight rise following a 45.1% gain in April. Exports of automobiles to the U.S. surged 244.7% as makers had increased their inventories.