Japan: March nominal exports to surge by 8.6% - Nomura

Kengo Tanahashi, Research Analyst at Nomura, expects Japanese nominal exports for March as a whole to surge by 8.6% while the nominal imports are likely to rise by 11.5%.

Key Quotes

“Nominal exports in the first 20 days of March were up 5.4% y-o-y (versus a rise of 16.1% in the first 20 days of February), and nominal imports rose 10.8% (down 4.6%). The data showed a marked contraction in the year-over-year growth rate for exports compared with last month. According to a Nikkei QUICK News report on 7 April, exports increased for goods such as auto parts, steel, and scientific/optical instruments, while imports increased for goods such as crude oil, coal, and petroleum products.” 

“There was one less business day in the first 20 days of March 2017 than in the first 20 days of March 2016, and one more business day in the remainder of the month. JPY was also weaker in the last 10 days of March than in the first 20 days of March. This would suggest that year-on-year growth rates for nominal imports/exports in the last 10 days of the month would be higher than in the first 20 days. That said, the USD import price of crude oil looks to have been lower in the last 10 days of March than the first 20 days, which could have pushed down the growth rate for imports slightly in the last 10 days of the month. Bearing this in mind, we estimate that nominal exports for March as a whole rose 8.6% and nominal imports rose 11.5%, which would be higher growth for both than in the first 20 days of the month. We estimate a trade surplus (original series) of JPY641.2bn and a seasonally adjusted trade surplus of JPY108.4bn. We estimate that the seasonally adjusted trade surplus shrank fairly substantially from JPY680.3bn in February.”

“Adjusting our March nominal import/export estimates to reflect corporate goods price index data for March (export prices up 3.7% y-o-y, import prices 12.5%) results in seasonally adjusted estimates of -4.1% m-o-m for real exports and 0.6% m-o-m for real imports. While we estimate real exports fell in March, we expect January-March to show a 1.0% q-o-q rise as the export recovery continues on a quarterly basis. We expect imports to fall 0.6% q-o-q.”

“One cause of concern, however, is that when comparing average real exports for January-February 2017 to October-December 2016, exports to the US were weak (down 2.0%). Exports to Asia were strong (up 4.5%) and boosted overall exports from Japan, but we are left with some doubt over the sustainability of export trends if US demand remains weak. The US ISM manufacturing index for March was 57.2 (February: 57.7) and the non-manufacturing index was 55.2 (57.6), both down from February, but the indices remain at high levels and do not suggest a change in the US business climate. When the March trade statistics for Japan are released, our focus will be on exports to the US.”