MNI POLICY: BOJ 3Q Real Export Index Posts 1st Rise In A Year

Japan's real export index posted the first quarterly rise in the July-September period, underpinning the Bank of Japan's view of a gradual pickup although the central bank continues to remain cautious about the outlook, MNI understands.

Bank officials expect Q4 exports to rise from the previous quarter but at a slower pace. Capital goods exports are likely to remain on a downtrend for a while since firms remain cautious about spending while demand for automobiles is likely to slow after peaking in Q3.

The real export index, calculated from Ministry of Finance data, rose 13.3% q/q in the third quarter, driven mainly by automobile demand, It was the first rise in four quarters and followed -18.4% in the second quarter.

The September real export index rose 5.5% m/m after an upwardly revised 6.6% gain in August and a 7.7% rise in July.

TRADE SURPLUS

Japan's trade data released Monday showed exports fell 4.9% year-on-year in September for the 22nd straight monthly drop while imports fell 17.2% for the 17th straight drop. Overall, Japan's trade surplus was JPY675.0 billion in September for the third straight monthly surplus.

Exports of automobiles fell 0.5% y/y in September, a sharp improvement from the 19.4% fall in August. Shipments of autos to the U.S., which account for about 40% of the total, rose 19.1% in September, reversing from a 3.5% decline in August. Exports to the EU fell 4.6% in September, easing from a 29.8% fall in August.

Exports to China, Japan's largest trading partner, rose 14.0% y/y in September for the third straight rise. Exports of chip-making equipment rose 47.2% while those of automobiles increased 33.6%. Exports to the U.S. rose 0.7% y/y in September, the first rise in 14 months.