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MNI INSIGHT: BOJ Sees Solid Q2 Exports Despite Weak May Data

--BOJ: Japan May Real Export Index -3.8% M/M Vs +5.3% in Apr
--BOJ: Japan Apr-May Real Export Index Average 1.5% Above Q1 Avg
--MOF: Japan May Exports +8.1% Y/Y Vs +7.8% in Apr 
By Hiroshi Inoue
     TOKYO (MNI) - Bank of Japan's real export index posted the first
month-on-month drop in two months in May but BOJ officials believe solid global
demand should support a moderate economic recovery, MNI understands.
     BOJ officials judge that the drop in May was in reaction to the strong
growth in April. They want to see the real export index for the April-June
quarter to grasp the underlying trend of exports.
     The seasonally adjusted real export index calculated by the BOJ based on
the trade statistics released Monday by the Ministry of Finance showed a 3.8%
month-on-month drop to 111.0 in May, the first drop in two months after rising
5.3% (revised from +5.2%) to 115.4 in April.
     However, the April-May average of the real export index came to 113.2,
which was 1.5% above 111.5, the index average of the January-March quarter, when
it edged up 0.5% from the previous three months.
     MOF data showed that global demand for Japanese automobiles and chip-making
equipment remained solid, the BOJ views.
     Despite Japan's GDP slump in Q1 and slower shipments to Europe, the BOJ
maintained its assessment in a post-meeting statement that Japanese exports were
expected to stay on a "moderate increasing trend."
     Japanese exports rose 8.1% on year in May, coming in stronger than the MNI
median economist forecast for a 7.4% rise, the MOF data showed. It was the 18th
straight year-on-year rise and the pace of increase accelerated from +7.8% in
April. The pace of growth in export volumes decelerated, however.
     BOJ officials view that global demand and Japanese exports have not yet
been hit by the protectionist U.S. trade policy.
     Exports of Japanese automobiles to the world rose 7.1% on year in May,
slowing from +15.3% in April, the MOF data showed.
     But BOJ economists don't see the slower pace as a sign of a fall in global
demand for Japanese cars.
     Shipments of automobiles to the U.S., which account for about 40% of total
Japanese auto exports, fell 3.9% on year in May after a 10.0% rise in April,
while those to the European Union, with a 12 % share of total Japanese auto
exports, rose 15.8% after rising 24.1% in April.
     BOJ officials were worried about global demand for Japanese electronic
parts and devices following weak factory production data (-5.7% on month in
April) and industrial shipments (-0.7% on month in April), but they were
heartened to thee details of the MOF data.
     Japanese exports of chip-making equipment to the world rose 23.4% on year
in May, accelerating from +18.0% in April. Exports of chip-making equipment to
China rose 90.7% on year in May after +115.6% in April and shipments of
semiconductor parts to China rose 10.6% in May after +11.0% in April.
     The BOJ's real import index rose 7.6% on month in May for the first rise in
three months following -0.8% (revised from -0.7%) in April, butt BOJ officials
are not so optimistic about domestic demand.
     In the MOF data, imports rose 14.0% on year in May, stronger than the MNI
median forecast of +8.0%. It was the second straight year-on-year rise after
+5.9% in April, led by higher prices for crude oil and purchases of aircraft and
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:

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