Japan: Expect large m-m fall in April real exports – Nomura

Research Team at Nomura, have estimated April 2016 imports and exports, data for which are scheduled for release on 23 May (Monday), using the trade statistics for 1-20 April released by the Ministry of Finance (MOF) on 12 May and the corporate goods price index announced by the Bank of Japan (BOJ) on 16 May.

Key Quotes

“Nominal exports down 9.8% y-y in first 20 days of April

Nominal exports in the first 20 days of April were down 9.8% y-y (versus -7.1% in the first 20 days of March), while nominal imports fell 20.0% (-20.8%). According to a Nikkei QUICK News report on 12 May, exports declined for steel, organic compounds, and metal processing machinery, while imports declined for petroleum, LNG, and telecom equipment.

We attribute weak exports mainly to soft external demand

Whereas the first 20 days of April had the same number of business days this year as last, the remainder of the month had one fewer business day than last year. For April as a whole, we estimate that nominal exports were down 10.7% y-y and nominal imports down 21.1%. We thus estimate a trade surplus (seasonally adjusted) of ¥274.1bn, marking a sixth consecutive monthly surplus.

Based on the April manufacturing PMI, the impact of the Kumamoto earthquakes that started on 14 April appears to have been. We also think the weakness in exports in the first 20 days of April is likely to reflect chiefly weak external demand. On that basis, we do not anticipate a significantly greater impact from the quakes in the last part of the month, when every business day will be affected, than in the first 20 days of the month.

Adjusting our April nominal import/export estimates to reflect corporate goods price index data for April (export prices -9.5% y-y, import prices -19.4%), and seasonality, results in seasonally adjusted estimates of -2.7% m-m for real exports and +1.0% for real imports. We estimate real exports in April will be down 2.4% on the average for Jan-Mar 2016 (when real exports rose 0.2% q-q) and that real imports will be down 0.2% (+1.0%). We thus expect both exports and imports to turn down.”