MNI POLICY: BOJ Jan Real Export Index Posts 1st Rise In 2 Mths

Japan's real export index rose in January for the first m/m rise in two months underpinning the Bank of Japan's view that recovering capital investment in the U.S. and China and growing global demand for technology-related goods will support shipments, offsetting any weakness in demand for auto products.

The index rose 3.3% m/m in January following a revised -0.9% in December. Overall, exports rose 6.4% y/y in January, marking the second straight rise and accelerating from +2.0% in December. But the country posted a trade deficit of JPY323.9 billion in January, its first deficit in seven months, as against a surplus of JPY749.6 billion in December.

Bank officials see solid exports and production supporting the economy, despite the pressure from weak private consumption, mainly in in-person businesses.

AUTO EXPORTS WEAKEN

Exports of chip-making equipment rose 50.5% in January, accelerating from +9.7% in December, while exports of semiconductors rose 11.4%, faster than +5.0% in December. Meanwhile, exports of automobiles fell 5.8% y/y following -4.2% in December as pent-up demand faded.

Exports of construction machines rose 12.5% y/y in January, driven by a 44.3% surge in shipments to China, Japan's largest trading partner, as capital investment recovered there while shipments of chip-making equipment accelerated to +58.3%.

Total exports to China rose 37.5% y/y in the month for the seventh straight gain. However, exports to the country are set to slow in February as China front-loaded imports ahead of Chinese New Year.