Japan exports slide less than expected, signal recovery in the economy

Exports in Japan fell less than expected during the month of June that signaled that the economy is recovering slightly from the shackles of poor growth, subdued inflation and low interest rates.

Japanese exports rose 2.9 percent in June from the same period a year earlier, in volume terms, posting the first increase in four months. The 7.4 percent annual decline in exports in June was less than the median estimate of 11.6 percent annual decline seen in a Reuters poll of economists, although it was the ninth consecutive monthly fall.

In addition, the trade balance hit a surplus of 692.8 billion yen versus a 494.8 billion yen surplus seen in the same poll. Imports were down 18.8 percent y/y versus a forecast for a 19.7 percent annual decline. Further, US bound shipments fell 6.5 percent y/y, considerably less than the 10.7 percent annual decline of the previous month due to a pick-up in food exports.

A recovery in Japan’s exports is expected to ease concerns for Bank of Japan policymakers as they struggle to revive growth and add stimulus to their structural reform plans that disappointed to deliver the expected outcome.

Meanwhile, the central bank is expected to ease interest rate policy at its monetary policy meeting scheduled to be held on July 29, according to a poll of economists by Reuters.