Japan posted its first trade surplus in three months in June, data showed Thursday, indicating that the world’s third largest economy is recovering more quickly than expected from the March 11 disasters. The country logged a 70.7 billion yen ($897 million) trade surplus last month, about a tenth of the year-before figure but overturning expectations of a deficit, finance ministry data showed.
Economists had on average expected a deficit of 148.6 billion yen, according to a poll by Dow Jones Newswires and the Nikkei business daily.
Analysts warned that while the latest trade data indicate Japan is on a faster-than-expected recovery track from the quake-tsunami, risks such as power shortages, US economic weakness and sovereign debt woes in Europe remain.
Daiju Aoki, economist at investment bank UBS, said recovery “is expected to continue”, despite the risks and a strong yen that is trading at four-month highs against the dollar. However, others said the latest data showed the economy still had some way to go to a full recovery. “Japan’s exports may not be able to maintain the pace of recovery down the road,” SMBC Nikko Securities chief market economist Mari Iwashita told Dow Jones Newswires, noting that growth in key markets such as the US and China – Japan’s biggest export market – appears to be slowing. The 9.0 magnitude earthquake and tsunami on March 11 devastated Japan’s northeast, leaving 20,000 dead or missing and causing massive production disruption, sending shipments of cars and other key export products plunging. As firms shuttered factories due to power and parts shortages, the economy was pushed into recession in the January-March quarter. However, supply chains have been recovering fast despite a volatile power situation in the wake of the nuclear accident at the Fukushima Daiichi plant and the suspension of reactors elsewhere. A government decree took effect on July 1 obliging big companies in the Tokyo and Tohoku northern region to reduce peak power usage by 15 per cent to avoid blackouts, the first such restrictions on power use since the 1974 oil crisis.
But companies have so far coped with the power use cuts by changing factory operation hours and other measures, Aoki said. June exports totalled 5.78 trillion yen, down 1.6 per cent from a year earlier. It was a much smaller drop compared with falls of 10.3 per cent in May and 12.4 per cent in April. Overall imports rose 9.8 percent to 5.71 trillion yen due to higher oil and other commodity prices, extending their rising streak to an 18th consecutive month. Aoki said the June trade surplus reflects factory output rising at the second fastest pace on record in May, soaring 5.7 percent from April. A May government survey of Japanese manufacturers found production would increase a further 5.3 percent in June and 0.5 percent in July. Production growth is seen slowing in July but Aoki said he believed “companies are not so pessimistic now as they were in May” when they were wary before the official start of power-saving drive. “Japan’s trade balance is unlikely to surge into big surplus or big deficit,” he said. Japan scored a 1.2 per cent rise in exports to China. US-bound exports fell 6.1 per cent in June for a fourth straight year-on-year drop, while exports to the European Union rose 8.0 per cent.
