MNI POLICY: BOJ Nov Real Export Index Sees 6th Straight Gain

Japan's real export index rose for a sixth straight month November, underpinning the Bank of Japan's outlook for exports to gradually recover as global demand picks up, MNI understands.

The November real export index rose 3.7% m/m, building on an unrevised 4.5% gain in October. Combined, October and November is 12.4% higher compared to Q3, which rose 13.2% for a first rise in four quarters. Exports have been supported by solid auto and auto part sales to the U.S. and China, although the BOJ data points to a slowdown in the coming months.

BOJ officials expect capital goods ex-transport equipment and IT-related goods to pick up the slack of any dip in auto exports as demand in the U.S. and China is recovering. However, businesses around the globe still appear hesitant about implementing capex plans due to the still uncertain near- and medium-term outlook, underlined by a 3.0% fall in machinery exports in November.

SMALLER TRADE SURPLUS

Overall, Japan's exports fell 4.2% y/y in November, marking a 24th straight drop, while imports fell at a greater 11.1% y/y. Overall, Japan's trade surplus was JPY366.8 billion in November, recording a fifth straight surplus but below the JPY871.7 billion surplus in October.

Exports of automobiles fell 3.0% y/y in November following the 3.0% rise in October, with shipments the U.S. up 6.6%, slowing from a 22.5% rise in October. Total exports to the U.S. fell 2.5% y/y in November, a first drop in three months following +2.5% in October.

Semiconductors exports fell 4.0% y/y in November, for the second straight drop following a 2.7% fall previously. Chip-making equipment exports rose 5.5% in November, increasing from +2.8% in October.

Exports to China, Japan's largest trading partner, rose 3.8% y/y in November for the fifth straight gain, although slowing from a 10.2% gain in October. Exports of chip-making equipment slowed to +11.5% in November from +29.0% in October.