Japan posted a goods trade deficit for the third consecutive month in January, hit by weak exports to China and the United States, government data showed Wednesday.
The trade deficit stood at ¥1.31 trillion ($12 billion), following an upwardly revised ¥154.55 billion deficit in December, according to a preliminary report released by the Finance Ministry.
Exports declined 2.6 percent from a year earlier to ¥5.43 trillion, down for the 14th straight month, and imports fell 3.6 percent to ¥6.74 trillion, falling for the ninth consecutive month, the ministry said.
Exports to China — one of Japan’s biggest trading partners — dropped 6.4 percent to ¥896.57 billion on declines in products such as materials for chemical products and auto parts, while imports were down 5.7 percent to ¥1.74 trillion, led by items including mobile phones and aluminum.
As a result, the balance had a deficit of ¥838.53 billion.
A ministry official referred to the tendency for exports to China to weaken before the Lunar New Year holiday, which fell in late January, earlier than last year.
The impact of COVID-19 was hard to quantify, the official said.
“We can’t say anything definite so far because the virus started spreading during the holiday. But we need to keep monitoring upcoming developments.”
Kazuma Maeda, an analyst at Barclays Securities Japan Ltd., said weaker exports to China were due to the timing of the holiday, and that the influence of the outbreak of the virus “will materialize in February or later.”
“Although February would ordinarily be expected to bring a recovery, this year appears likely to see a decrease, especially for goods such as electronic components,” Maeda said.
“Exports to the United States and Europe remain sluggish, suggesting they will not be able to offset any such weakness to China.”
Japan’s trade surplus with the United States inched up 0.3 percent to ¥369.23 billion, the first increase in five months, helped by a decline in crude oil imports. Exports to the world’s biggest economy fell 7.7 percent to ¥1.05 trillion, down for the sixth straight month.
The size of Japan-U.S. trade contracted despite their trade deal, which entered into force Jan. 1 and eliminated or lowered tariffs on U.S. beef and other agricultural products, as well as on Japanese exports such as components for air conditioning units. The U.S. levy on Japanese cars remains.
Across Asia including China, Japan’s trade balance turned red for the first time in a year with a deficit of ¥567.86 billion, as the downturn in exports surpassed the slide in imports.
With the European Union, Japan saw a trade deficit of ¥91.38 billion, marking the seventh straight monthly red ink.
The figures were compiled on a customs-cleared basis.
Meanwhile, Japan’s core private-sector machinery orders posted their largest drop in 15 months in December with a 12.5 percent fall from the previous month, as a one-off spike in demand for railway cars faded, separate government data showed Wednesday.
The orders, which exclude those for ships and from utilities due to their volatility, totaled ¥824.84 billion, according to the Cabinet Office.
The fall in orders, seen as a leading indicator of capital spending, followed an 18.0 percent jump in November, the biggest increase since comparable data became available in April 2005, boosted by orders for pricey railway cars.
While the 12.5 percent fall marked the sharpest decline since September 2018, when they dropped 17 percent, the Cabinet Office maintained its assessment of orders, saying they are “stalling.”
“While the decline was large in December, it followed a steep rise in November. If we look at the numbers over the course of several months, we do not think that the situation rapidly deteriorated in December,” a government official told reporters.
On a quarterly basis, core orders fell 2.1 percent in the October-December period, with the Cabinet Office projecting a 5.2 percent decrease in the quarter to March.
The forecast was made based on a survey of 280 manufacturers as of the end of December and is unlikely to reflect concerns about the coronavirus outbreak on businesses, the official said.