Exports finally pick up as soft yen curbs prices
TOKYO -- Japanese exports are increasing as the impact of the falling yen finally starts to emerge via lower prices for goods sold overseas.
The Cabinet Office said Thursday that the seasonally adjusted export volume index for October came to 92.7, up 2.2% from September and the second straight month of gains. The index hit its highest level since June 2012. The benchmark of 100 is set at 2010 levels.
Export value last month rose 9.6% on the year, faster than the 2.7% increase in imports, according to the Finance Ministry. And the trade deficit -- imports minus exports -- shrank 35.5% on the year to 710 billion yen ($5.95 billion).
The volume index shows shipments to all three major destinations -- the U.S., the European Union and Asia -- rose month to month for the first time in a year.
Shipments to Europe were sluggish until September, but jumped 9.5% in October on brisk automotive demand. U.S.-bound exports edged up 0.7% on growing shipments of goods such as autoparts. Exports to Asia increased 0.5%, bolstered by strong demand for semiconductors.
The yen has weakened significantly over the past two years due to the bold monetary easing by the Bank of Japan, but many Japanese companies, eyeing profitability, were hesitant to cut prices in overseas markets. After the yen's most recent slide, however, some have relented.
The export price index compiled by the Bank of Japan, which measures how much exports cost in overseas markets, declined 1.7% on the year in October to 97.5, the lowest since July 2009. The subindex for electrical machinery dipped 3.9%, and that for metal materials and products dropped 3.3%.
With lower prices boosting sales abroad as Japanese firms undercut rivals, electronic component exports rose 8.7% in value from a year earlier, and steel saw an 11.8% increase, driving the overall growth of 9.6%.
"The price competitiveness from the softer yen is finally being reflected in exports," said Yasunori Miwa, head of the Itochu Economic Research Institute.
Although sluggish economies in Europe and elsewhere were also weighing on Japanese exports, the outlook is improving. The International Monetary Fund sees global exports growing 5% in 2015, faster than the 3.8% expansion projected for this year. The brisk U.S. economy is driving the surge in exports from Asia as a whole.