Highest trade surplus in year can't lift gloom

Japan’s trade surplus in May came to ¥299.84 billion, its highest level in a year, as the pace of decline in exports slowed and imports fell sharply, the Finance Ministry said Wednesday.

It was the fourth straight monthly surplus, following a record deficit in January when the deepening impact of the global crisis sapped demand for exports. The size of the surplus was down 12.1 percent from a year earlier, the ministry said in a preliminary report.

The latest data aren’t encouraging. Both exports and imports slipped several percentage points from April, even though many top government officials have recently claimed the worst part of the recession came to an end in the January-March quarter.

Imports dropped 42.4 percent to ¥3.721 trillion as domestic demand for foreign goods remained sluggish and crude oil prices declined on a year-to-year basis.

Exports fell 40.9 percent from a year earlier to ¥4.021 trillion, mainly due to continued weak demand for cars, electronics devices and steel products.

Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co., said the expansion in the surplus could be temporary, even if exports, underpinned by stimulus measures implemented by governments around the world, rise in the coming months.

“A possible pickup in imports driven by the rising yen could eat into Japan’s exports,” Miyazaki said. “Even if domestic demand gradually recovers, many consumers will probably shop for cheaper imported goods, not expensive Japanese products.”

By region, exports to the United States fell 45.4 percent to ¥644.52 billion. The margin of decline narrowed for the third consecutive month. Imports from the U.S. shrank a record 40.3 percent to ¥418.59 billion.

The surplus with the U.S. sank 52.9 percent to ¥225.93 billion, down for the 21st straight month.

With Asia, the surplus contracted 33.2 percent to ¥596.56 billion. Exports to the region fell 35.5 percent to ¥2.249 trillion and imports declined 36.3 percent to ¥1.652 trillion.

Exports to China totaled ¥815.28 billion, down 29.7 percent from the same month last year. Imports dropped 32.0 percent to ¥816.14 billion.

Japan logged a trade deficit of ¥860 million with China. The size of the deficit fell for the first time since March and was substantially smaller than the deficit of ¥178.61 billion registered in April.

The surplus with the European Union shriveled 75.4 percent to ¥84.34 billion. Exports dropped 45.4 percent to ¥524.35 billion and imports decreased 28.8 percent to ¥440.01 billion.