Japan exports jump, but trade still in red; corp mood dips

Thu Apr 19, 2012 3:02am EDT
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By Rie Ishiguro and Tetsushi Kajimoto

TOKYO (Reuters) - Japan's exports rose in March from a year earlier for the first time in six months, mainly on the strength of U.S. sales, but high fuel imports pushed the trade balance back into deficit and manufacturers remain cautious about business in months ahead.

Reflecting rekindled worries about Europe's debt crisis and concerns the yen could rally again, manufacturing confidence dipped in April after a sharp rebound the previous month, a Reuters poll showed.

The subdued sentiment suggested the Bank of Japan will remain under pressure to ease monetary policy further when it meets on April 27 to support the fragile economic recovery.

Exports rose 1.2 percent in seasonally adjusted terms in March and 5.9 percent from a year earlier, compared with economists' median forecast of a steady reading, as U.S.-bound shipments grew at the fastest pace in nearly two years on auto demand. JPEXPY=ECI

Imports soared 10.5 percent in the 12 months to March, pushing the trade balance into deficit after it posted a surplus in February. JPIMPY=ECI However, the gap of 82.6 billion yen ($1.0 billion), came well below analysts' forecast of 220 billion yen. In January, Japan recorded its biggest ever trade deficit of 1.476 trillion yen. JPTBAL=ECI

Japan's trade balance is expected to remain in deficit in coming months as it imports more oil and natural gas to offset the loss of nuclear power supply, which could start eroding its vast savings and hamper its ability to finance huge public debt.

"Exports to the United States grew but shipments to China remained weak, so Japanese exports will struggle unless China, which is Japan's biggest export destination, achieves economic recovery," said Takeshi Minami, chief economist at the Norinchukin Research Institute in Tokyo.

Manufacturers face a worsening plight in trade with other countries due to oil price rises, which boost raw material costs, and the yen's stubborn strength, as highlighted by the Reuters tankan, he said.   Continued...

Men stand in a shipping container area in Tokyo April 19, 2012. REUTERS/Toru Hanai