Japan sees trade surplus in June as imports drop 19 percent

TOKYO – Japan posted a better-than-expected trade surplus in June, as imports fell nearly 19 percent, outpacing a more modest decline in exports.

The customs data released Monday showed a 692.8 billion yen ($6.5 billion) surplus, compared with a 60.9 billion yen deficit in June 2015.

Economists had forecasted larger declines for both imports and exports for the world’s third-largest economy.

Despite the recent strengthening of the Japanese yen against the U.S. dollar, export prices have fallen 14 percent from a year earlier, according to separate data from the Bank of Japan. That trend is hurting corporate revenues and profits, Marcel Thieliant of Capital Economics said in a commentary.

Overall volumes of exports and imports were better than expected. But Japan’s exports to the U.S., its biggest overseas market, fell 6.5 percent in June from a year earlier, while exports to China, its largest trading partner, dropped 10 percent.

Shipments of vehicles, chemicals and machinery fell year-on-year. At the same time, imports of oil, coal and gas dropped by over a third in value, in part reflecting lower prices.

However, recent surveys of factory managers show weakness in overseas demand.

“Indeed, we expect a 1 percent drop in export volumes this year following a 3.4 percent jump last year,” Thieliant said.

Japan’s economic recovery has suffered as an anticipated strong rebound in exports failed to materialize, and the trade data for June are unlikely to disrupt an expected move by the Bank of Japan to increase monetary stimulus at a policy meeting later this week, said Masamichi Adachi of JP Morgan in Tokyo.