MNI INSIGHT: BOJ Still On Edge As Real Export Index Down Again

By Hiroshi Inoue

     TOKYO (MNI) - The Bank of Japan's real export index posted a second

straight drop in November as weak exports across the auto sector continued to

weigh on the Japanese economy and the central bank remains nervous about the

outlook, MNI understands.

     However, the BOJ hopes there will be some pick-up in exports if the global

economy gathers speed in 2020 following a partial trade deal between the U.S.

and China last week.

     With overseas economies seen sluggish for the immediate future, the BOJ is

unlikely to change its view that "exports are expected to show some weakness for

the time being", as it could take some months for any boost from improving

global trade sentiment.

     --REAL EXPORTS FALL

     The real export index fell 1.7% in November, following a downwardly revised

1.6% fall in October. The real export index for the October-November fell 2.5%

on quarter.

     Exports fell 7.9% y/y in November, an 12th straight drop following a 9.2%

decline in October. Imports fell 15.7% y/y for a seventh straight drop following

a fall of 14.8% in October. That saw Japan post a trade deficit of Y82.1 billion

- the first deficit in two months following October's surplus of Y15.7bln.

     Car shipments to the U.S., which account for about 40% of Japan's total

auto exports, fell 17.1% on year in November after a 17.7% fall in October and

those to Asia fell 1.0% in November after a 15.9% fall in October.

     Auto shipments to China were mixed, with car shipments up over 34% on year,

while auto parts were down 16.4%.

     The continued weakness in the auto sector is a matter of concern for the

BOJ and there is a concern continued weakness will start to impact across the

manufacturing sector.

     There was some bright notes, with auto exports to the EU gaining for a

third consecutive month, up 11.7% in November following a 12.8% gain in October.

     --WEAK MACHINERY EXPORTS

     Machinery exports were also sluggish, down 12.0% in November against a

13.3% fall in October, underlining the continued weakness in the sector.

     Wednesday's data highlighted the continuing, but modest, recovery in the

semiconductor sector, suggesting it may take time to see a full recovery for

IT-related goods.

     Overall, BOJ still sees the global slowdown as the main factor weighing on

exports, but it expects easing trade friction to help pull the sector higher.

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

[TOPICS: MMJBJI,MMJBJ$,M$A$$$,M$J$$$,MT$$$$,MX$$$$]