Japanese trade surplus narrows

Japanese trade surplus shrank in June from a year earlier for the third straight month, but the fall was smaller than expected and exports topped forecasts, easing worries over a slowdown in one of the economy's main driving forces. The surplus fell 23.5 percent from the same month last year to 873.1 billion yen ($7.7 billion), Finance Ministry data showed on Thursday, higher than a median market forecast of 750.6 billion yen.
A jump in import costs due to higher oil prices was mostly to blame for the narrowing in the surplus, while a rise in exports to China provided some encouragement after recent sluggishness.
"Exports have yet to recover, but the data in no way suggests that they are headed for worse," said Masaaki Suzuki, economist at Mizuho Research Institute.
"Instead, we are seeing signs that the slowdown in exports to China may be moderating," he said.
Exports to China rose 2.3 percent from a year earlier after being flat in May, the data showed, reinforcing views that a comparative slowdown in shipments is inevitable after 20 percent growth last year.
Recent measures by Beijing to cool parts of its economy have taken a toll on Japanese exports, raising worries for the Japanese economy, whose recent growth had relied heavily on demand from China for Japanese goods.
A Finance Ministry official also noted that China had increased its ability to replace imported goods such as semiconductors with products made domestically.
But analysts said strong economic growth in China - which came in at 9.5 percent in the second quarter - may mean Japanese exports would pick up soon, although the pace could stay muted.
"Many companies were importing capital goods from Japan to use China as an export base, but they are now increasingly likely to rely more on goods procured domestically in China," said Satoru Ogasawara, macro strategist at Credit Suisse First Boston Securities.
"So even if exports to China recover, the growth rate won't be as spectacular as it had been over the last few years," he said.
Overall, Japan's exports rose 3.6 percent in June from a year earlier to 5.5 trillion yen, while they rose 2.4 percent from a month earlier on a seasonally adjusted basis. Analysts had forecast a 1.3 percent year-on-year rise.
Imports, on the other hand, jumped 11.0 percent to 4.6 trillion yen, and 2.9 percent on a month-on-month basis, bringing the seasonally adjusted trade surplus to 694.4 billion yen.