MNI INSIGHT: BOJ Sees Solid Q2 Exports in Apr Trade Data

--BOJ Data: Apr Real Export Index +5.2% M/M Vs -2.0% in Mar

--BOJ Data: Q1 Real Export Index +0.5% Q/Q Vs +1.7% in Q4

--MOF Data: Apr Exports +7.8% Y/Y Vs +2.1% in Mar 

By Hiroshi Inoue

     TOKYO (MNI) - Japan's real export index calculated by the Bank of Japan

posted the first rise in three months in April, leading BOJ officials to expect

solid exports based on global demand in the second quarter, MNI understands.

     Trade data showed that global demand for Japanese automobiles and capital

goods used for investment in equipment remained solid, the BOJ views.

     In the monetary policy statement to be issued after the bank's June 14-15

meeting, BOJ officials will maintain their assessment that exports are expected

to continue their "moderate increasing trend" on the back of firm global

economic growth.

     Based on this and the BOJ's view that the Q2 GDP will rebound after the Q1

contraction, which BOJ officials believes was caused by a temporary slump in

consumption, the bank is expected to repeat in its June statement that the

Japanese economy will stay on a modest recovery track.

     --REAL EXPORTS UP

     The seasonally adjusted real export index calculated by the BOJ based on

the trade data released Monday by the Ministry of Finance showed a 5.2%

month-on-month rise in April, the first rise in three months after -2.0%

(revised from -1.9%) in March.

     In January-March, the real exports index rose 0.5% on quarter, the fifth

straight q/q rise following +1.7% in October-December 2017.

     MOF data showed that Japanese exports rose 7.8% on year in April, coming in

weaker than the MNI median economist forecast for an 8.7% rise. But it was the

17th straight year-on-year rise and the pace of increase accelerated from +2.1%

in March.

     --SOLID AUTO EXPORTS

     Exports of Japanese automobiles to the world rose 15.3% on year in April,

accelerating from +5.4% in March, the MOF data showed.

     Shipments of automobiles to the U.S., which account for about 40% of total

Japanese auto exports, rose 10.0% on year in April after a 3.2% rise in March,

while those to the European Union, with a 12 % share of total Japanese auto

exports, gained 24.1% after an 8.7% fall in March.

     The U.S. demand for sport utility vehicles made in Japan remains firm,

although the demand for Japanese sedans made in the U.S. has been flat, the BOJ

analyzed.

     The BOJ will release the details of its real trade indexes Thursday.

     BOJ officials have also confirmed continued firm overseas demand for

Japanese construction machines and power generating machines, which are used for

capital and housing investment.

     Exports of construction machines to the U.S. rose 29.9% on year in April,

up from +12.9% in March, according to the MOF data.

     The trade data also confirmed solid demand for Japanese chip-making

equipment in China (+116.3% on year in April vs. +72.7% in March) and in Asia

(+19.8% in April vs. +16.1% in March).

     --SOFTER IMPORTS

     On the other hand, the BOJ's real import index fell 0.7% on month in April

for the second straight fall following -6.9% in March.

     BOJ officials don't think the decline as a sign of showing weak domestic

demand but they are also carefully monitoring more data. The real import index

tends to fluctuate sharply from month to month.

     In the MOF data, imports rose 5.9% on year in April, slower than the MNI

median forecast of +10.3%. It was the first year-on-year rise in two months

after -0.6% in March, led by increased purchases of crude oil, power generating

machines and coal.

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

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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