Japan posts September trade deficit of 536.6 billion yen, exceeding forecasts
Key Facts
Japan recorded a trade deficit of 536.6 billion yen in September, exceeding economists' forecasts, according to Japanese trade figures reported by Reuters. Economists had expected a deficit of 181 billion yen and stronger export growth during the month. However, the deficit narrowed from August's 1.11 trillion yen, according to Investing's coverage. Slower import growth helped narrow the trade gap from the previous month, despite a slowdown in export growth as well. The official data were released on October 21, Japan time, showing September exports and the trade balance falling short of market expectations.
The value of Japanese exports rose 16.7% year on year in September, according to Reuters, extending their increase from the same month a year earlier. The result fell short of the 20.1% increase forecast by economists polled by the agency before the release. Growth also slowed from August, when exports rose 19.3% year on year, according to Reuters' coverage of that month's data. Despite the slowdown, exports rose year on year for the 13th consecutive month, extending the run of increases through September. Reuters said companies' efforts to pass higher costs on through prices remained among the factors supporting the value of Japanese exports.
On the import side, Japan recorded a year-on-year increase of 18.9% in September, according to data reported by Reuters. Economists had forecast import growth of 19.6%, leaving the actual increase below estimates as well. Import growth slowed from August, when their value rose 28% from the same month a year earlier, according to the agency. Reuters linked the slowdown to fewer crude oil shipments arriving in Japan after tankers were rerouted away from Bab el-Mandeb. The rerouting delayed deliveries to Japan, linking part of the slowdown in imports to the timing of oil arrivals in the country.
By destination, Japanese exports to the United States rose 22.9% year on year in September, according to details reported by Reuters. Shipments to China increased 8.6% over the same period, growing more slowly than exports to the U.S. market. The agency attributed continued strength in exports of semiconductors and chipmaking equipment to global investment in artificial intelligence. On energy, Japan imports almost all its oil needs, according to the Associated Press, while shipping routes affected crude arrivals during September. Reuters cited the government as expecting crude oil purchases to recover in October to around 100% of their level in the same month a year earlier, as tankers arrive via the Suez Canal.
The trade figures follow the Bank of Japan's interest rate increase to 1.25% at its September meeting, according to Reuters. That took the rate to its highest level in 31 years in the bank's latest monetary policy decision. In the same month, core consumer price inflation in Tokyo accelerated to 2.7% year on year from 1.8% in August. Tokyo's core inflation measure includes fuel prices and excludes fresh food, according to the index definition in Reuters' coverage. Bank of Japan Governor Kazuo Ueda said after the September decision, according to the Associated Press, that "Japan's economy continues to recover gradually."
A summary of opinions from the September meeting showed one Bank of Japan member calling for a faster pace of interest rate increases, according to Reuters. The member tied the move to a specific condition, saying: "If signs of prices deviating to the upside are observed, the bank will need to accelerate the pace of interest rate increases." September consumer price data are scheduled for release on October 23, Japan time, according to the Statistics Bureau's official calendar. The Bank of Japan holds its next monetary policy meeting on October 29 and 30, according to its meeting schedule. The bank is scheduled to publish its assessment in the Outlook for Economic Activity and Prices report on October 30, coinciding with the conclusion of the meeting.