Shipments of manufactured goods to the United States from Japan fell in April for the first time in 27 months. Meanwhile, Japan’s trade surplus with Europe and Asia continued to rise, driven by strong exports of Japan-made cars, steel and telecommunication systems. In a news release, the Japanese Ministry of Finance said Japan’s overall trade surplus was 926.68 billion yen ($7.59 billion) in April, up from 610.64 billion yen ($5.0 billion) the comparable month a year ago, but lower than the 957.5 billion yen ($7.84 billion) surplus that economists were expecting.
“The overall trend of Japan's exports has shown sluggish growth recently although it has not yet started to deteriorate,” said Norio Miyagawa, an economist at Shinko Research Institute. “Exports to the US are beginning to show the impact of a slowing economy, affected by inventory adjustment of cars and a weak housing market, but Japan's exports to other areas, such as to the European Union and Asia as well as to Middle Eastern nations, supported overall export growth,” said Miyagawa.
Exports to the United States, Japan's key trading partner, fell 4.8 percent last month, with car shipments down 7.5 percent year-on-year, the first fall in 25 months, and exports of construction equipment down 31.2 percent. But Japan’s exports to Europe rose 9.7 percent year-on-year, the 18th straight monthly rise. Shipments to Asian countries also rose 11.1 percent, their 62nd straight monthly gain, mainly driven by a 37.2 percent rise in steel exports. Of Japan's exports to Asia, shipments to China rose 16.8 percent, as exports of chemical compounds climbed 65.4 percent while shipments of telecommunication systems rose 611.2 percent from the previous year, according to Japan’s Ministry of Finance. According to the Japanese Cabinet Office, gross domestic product grew at an annual rate of 2.4 percent in the three months ending March 31, and the 2006 fourth-quarter figure was revised to 5 percent from the originally projected 5.5 percent.
Japanese consumer spending, accounting for more than half of Japan’s gross domestic product, rose more than expected and may cushion the economy from waning growth in the U.S. Bonds had their biggest gain in five weeks on speculation slower growth and two months of falling consumer prices will delay an interest-rate increase from 0.5 percent. Of 17 Tokyo-based economists surveyed by Bloomberg News earlier this week, eight said the central bank will probably raise rates in the third quarter and five said it will act in the last three months of 2007. The remaining four said the bank will wait until 2008.