Japan trade surplus jumps, while US dealings slip

Japan's trade surplus jumped 66 per cent year-on-year in June on strong growth in shipments to China and other Asian countries, though exports and imports with the United States weakened.

Preliminary data released on Thursday by the Finance Ministry showed exports rose 6.7 per cent in June from a year earlier to ¥7.1 trillion (US$62 billion) on strong demand for machinery, food, metals and computers. Imports climbed 2.5 per cent to ¥6.3 trillion (US$66 billion).

The resulting ¥721.4 billion (US$6.4 billion) surplus compared with a surplus of ¥433 billion a year earlier.

Japan recorded a deficit of ¥580.5 billion in May.

Exports to the US edged 0.9 per cent lower with falling shipments of cars and trucks, while imports fell 2.1 per cent, leaving the politically sensitive trade surplus with Japan's second-largest export market after China little changed.

The Trump administration has imposed tariffs this year on imports of steel and aluminium from many countries, including Japan. It is also threatening tariffs on autos and auto parts, drawing criticism from a US auto industry whose supply chains are deeply enmeshed in global trade.

Japan recorded a trade surplus for the six months through June, the fifth straight half-year period of surplus. The surplus with the US was ¥3.15 trillion (US$27 billion).

The administration of Prime Minister Shinzo Abe has been striving to diversify Japan's trade. This week, Tokyo and the European Union signed a trade deal that will eliminate almost all tariffs on each other's exports.

Meanwhile, a strategy of building up markets for Japanese exports in Asia is paying off, with strong demand for machinery, metals and vehicles. But Japan's imports of electrical machinery and other industrial inputs, food and chemicals fell as the economy has slowed, while rising prices helped push oil and gas imports higher.

"Even if we take a three-month average, import volumes have been growing at the slowest pace since late-2016 in recent months, which suggests that domestic demand is no longer as vigorous as it was last year," Marcel Thieliant of Capital Economics said in a commentary.

He noted that in seasonally adjusted terms, exports were flat while imports sank more than five per cent.

Exports to China rose 11 per cent year-on-year in June to nearly ¥1.4 trillion (US$12 billion), while imports from China edged less than a per cent lower to ¥01.45 trillion (US$12.9 billion) as the trade deficit dropped 68 per cent.

- AP