MNI INSIGHT: BOJ Jan Real Export Index Falls, Virus Worries

--BOJ Concern Disrupted Supply Chains Could Lower Production

By Hiroshi Inoue

     TOKYO (MNI) - Japan's real export index fell in January and the Bank of

Japan is concerned it will fall again in February when the coronavirus outbreak

will likely have a greater influence on manufacturers as supply chains are

interrupted, MNI understands

     The BOJ's own real export index fell 4.6% m/m in January, reversing a

revised 2.0% gain in December and officials are now eyeing Q1 data for signs of

a recovery from the 2.1% fall in Q4. The January weakness came as no surprise

given the Chinese Lunar New Year holiday.

     Exports fell for a 14th straight month in January, down 2.6% y/y, albeit

slowing from the 6.3% decline in December. Imports fell 3.6%, recording a 9th

straight decline. February's data is expected to show a greater fall in exports,

particularly to China, as the full force of the virus outbreak hits home.

     Overall, Japan saw a trade deficit of JPY1.313 trillion in January,

recording a third straight deficit.

     Latest data show a continued pick-up in global demand for IT-related goods,

although demand for capital goods remained weak, while demand for auto and auto

parts remains weak across the globe remained weak.

     Exports of semiconductors rose 1.4% y/y in January, up for a second

straight month following a 2.6% gain in December. Auto exports fell 4.7%

following a sharp 11.8% fall in December, while auto part exports fell 4.2% in

January vs a 10.9% decline in December.

     Machinery shipments fell sharply again in January, down 9.5% after falling

6.2% in December.

     Overall exports to China fell 6.4% y/y after a modest 0.8% y/y rise in

December.

     Japanese manufacturers have started moving production out of China, fearing

the coronavirus outbreak could prolong plant closures and wreak further havoc on

supply chains.

     The BOJ still expects exports to pick up, but now thinks "the timing of

(the) recovery seems to be delayed from toward mid-2020 expected."

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

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