MNI POLICY: BOJ Real Export Index Posts Second Straight Rise

Japan's real export index posted the second straight quarterly rise in the fourth quarter helped by recovering global demand and underpinning the Bank of Japan's growth view, MNI understands.

The real export index rose 12.7% q/q in the October-December period following 13.2% growth in Q3. The pace of growth is expected to slow sequentially in the first quarter since demand for automobiles and auto parts is weakening.

Still, bank officials expect exports to remain solid as demand for IT-related goods and capital goods, driven by recovering capital investment in the U.S. and China, offsets the dip in autos.

The December real export index fell 1.0% m/m for the first drop in seven months following +3.8% in November.

TRADE SURPLUS

Japan's exports rose 2.0% y/y in December, marking the first rise in 25 months, while imports tumbled 11.6% y/y, slightly more than the 11.1% contraction in November. Overall, the trade surplus was JPY751.0 billion in December. It was the sixth straight surplus and above the JPY366.1 billion in November.

Exports of automobiles fell 4.2% y/y in December after the 3.0% drop in November, with shipments to the U.S., which account for about 40% of the total, up 3.9%, slower than the 6.6% rise in November. Total exports to the U.S. fell 0.7% y/y in December, the second straight drop.

Exports of construction machines rose 32.6% y/y in December, underlining recovering capital investment in the U.S. and China.

Semiconductor exports rose 5.0% y/y in December for the first rise in three months. Chip-making equipment exports rose 9.7%.

Exports to China, Japan's largest trading partner, rose 10.2% y/y in December for the sixth straight gain. Exports of chip-making equipment slowed to +2.9% while auto exports rose 11.2%.