Japan's Export Growth Accelerated in November

Bloomberg Dec 22---Japan’s export growth accelerated for the first time in nine months as a rebound in global demand helped the nation’s economy withstand the yen’s advance to a 15- year high.

Overseas shipments rose 9.1 percent in November from a year earlier, from October’s 7.8 percent gain, the Finance Ministry said in Tokyo today. The median estimate of 19 economists surveyed by Bloomberg News was for a 10.3 percent increase.

Export gains were led by demand in China and Europe, easing concern that Japan is losing its main driver for a recovery from its worst postwar recession. Komatsu Ltd., Asia’s largest maker of construction equipment, and carmaker Honda Motor Co. are forecasting sales will grow in China.

“Although exports may decline this quarter, they will probably rebound in the first quarter given the global economy is picking up and the negative effect of the strong yen may start to wear off,” said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. “Exports will be a trigger to jump-start the economy next year.”

The yen traded at 83.81 against the dollar at 11:08 a.m. in Tokyo, from 83.79 before the report was released. The Nikkei 225 Stock Average rose as shares of exporters including Canon Inc. and Sharp Corp. advanced.

The value of exports to China, Japan’s biggest market, advanced 18.3 percent in November from a year earlier, compared with a 17.6 percent increase in October. Sales to Europe rose 10.1 percent, compared with a 1.9 percent drop in October.

Gains in U.S. shipments moderated to 1.2 percent, compared with 4.7 percent in October.

Global Rebound

“Recent economic indicators have posted signs of reacceleration in global growth, particularly in the U.S. and in China” which bodes well for Japanese exports, said Takehiro Sato, chief Japan economist at Morgan Stanley MUFG Securities Co. in Tokyo.

The global recovery may gain traction as demand appears to be picking up in the U.S. and China. Manufacturing in China grew at a faster pace for a fourth straight month and in the U.S., the index of leading economic indicators increased in November by the most in eight months and manufacturing expanded.

Komatsu is selling more excavators in China than it expected this quarter as the government spurs infrastructure development in its interior regions. China unit sales of excavators, the best-selling construction equipment, may climb 25 percent in the quarter ending Dec. 31, exceeding the firm’s October estimate of 15 percent growth, President Kunio Noji said on Dec. 17.

China Sales

Honda Motor, Japan’s second-largest carmaker, said on Dec. 17 it expects sales in China to climb at least 10 percent next year as rising wages and economic growth fuel demand.

In Japan itself, the “recovery seems to be pausing,” the Bank of Japan said yesterday. Industrial output fell by the most since February 2009 in October, the jobless rate rose and machinery orders declined more than economists forecast.

Japan’s gross domestic product is expected to shrink at a 1.9 percent annual pace in the three months through December, according to a survey of 42 economists released Dec. 8 by the Economic Planning Association. Growth was 4.5 percent in the third quarter as incentives to buy cars and electronics encouraged consumer spending.

The yen has still gained more than 11 percent this year, threatening the value of companies’ overseas earnings and international competitiveness.

Export Struggle

”With the yen staying at these high levels, exports will likely struggle to grow even though demand in advanced nations, mainly the U.S., will recover,” said Takuji Okubo, chief Japan economist at Societe Generale SA in Tokyo.

The Japanese parliament last month passed an extra budget to fund a stimulus package aimed at fighting deflation and combating the stronger yen. To foster growth, the Bank of Japan cut its benchmark interest rate and created an asset-purchase fund in October.

Prime Minister Naoto Kan’s Cabinet last week approved an outline of tax revisions, including a cut in corporate tax rate, to bolster a slowing economy. His government also is compiling a budget for the next fiscal year.

Kan’s declining popularity and a split parliament may complicate his efforts to implement new economic policies. The Kan Cabinet’s approval rating fell to 21 percent, the lowest since he took office in June, according to a survey by the Asahi newspaper. The poll was conducted on Dec. 11 and 12, and compared with 27 percent in a November poll.

From a month earlier, shipments rose a seasonally adjusted 1.7 percent, the third monthly of gain, today’s report showed. Imports climbed 14.2 percent in November from a year earlier and the trade surplus narrowed to 162.8 billion yen.