MNI INSIGHT: Japan Export Index Rebounds, BOJ Remains Cautious

--BOJ: Japan Oct Real Export Index +6.2% M/M Vs -5.5% in Sep

--BOJ: Japan Q3 Real Export Index -1.9% Q/Q Vs +0.6% in Q2

--MOF: Japan Oct Exports +8.2% Y/Y Vs -1.3% in Sep

By Hiroshi Inoue

     TOKYO (MNI) - Bank of Japan officials remain cautious over the outlook for

exports amid continued global trade tensions, despite their calculations showing

an October rebound in the real export index, MNI understands.

     Despite the continued vigilance, officials will keep their assessment that

Japan's exports are on an uptrend unchanged, as they see no significant signs of

a worsening for the global economy despite continued trade frictions.

     --EXPORT INDEX REBOUNDS

     The BOJ's real export index, calculated based on the Ministry of Finance

trade data, will show a rise of 6.2% on month in October, the first rise in two

months and coming after a 5.5% fall in September.

     The real export index fell 1.9% on quarter in the third quarter, the first

quarterly drop since Q1 2016.

     The BOJ will release the full details of its real export indices for

October on Thursday.

     BOJ officials are paying close attention to how the real export index

evolves in November and December, and thus the quarter-on-quarter move in order

to examine the underlying trend.

     October's rebound in exports is a good sign, but the BOJ isn't overly

optimistic about the outlook, as uncertainties remain over global demand, a

person who familiar with BOJ thinking told MNI. The person said that the BOJ

needs to examine whether the real export index as well as exports returns to the

previous rising trend.

     Single month weak export data alone is not enough for the BOJ to change its

assessment on external demand, as BOJ officials are focused on

quarter-on-quarter changes in both exports and industrial production to see the

underlying trend.

     If global demand for Japanese goods, such as cars and capital goods

(excluding transport equipment, which is linked to capital investment overseas)

remain solid, both exports and production will rebound in the fourth quarter,

the BOJ views.

     --OUTPUT DATA EYED

     Another focus is the October industrial production data due out on Nov 30

as the BOJ is closely studying all output data, which is consistent with

exports, not only to assess the current economic climate but also to predict the

outlook.

     After seeing Monday's latest export data, BOJ officials expect October

industrial production to rebound from the 0.4% fall in September. 

     The MOF data released Monday showed that Japanese October exports rose 8.2%

on year for the rise in two months following a fall of 1.3% previously,

indicating that overall global demand didn't disappear and demand for Japanese

goods remained  solid.

     Exports of motor vehicles across the globe rose 7.3% on year in October,

reversing September's 4.7% fall, and exports of motors to the world rose 22.1%

m/m in October, accelerating from a 3.9% gain in September.

     --REBOUNDING EXPORTS

     Exports to the U.S. and the European Union both marked the first y/y rise

in two months. Exports to China also posted the first y/y rise in two months,

while exports to Asia showed the eighth straight y/y rise.

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

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

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