— July Surplus Growth Follows -18.2% Y/Y In June

TOKYO (MNI) – Japan’s current account posted a surplus of Y1.676
trillion in July, up 26.1% from the surplus of Y1.329 trillion a year
earlier, marking the first year-on-year rise in three months as the
trade surplus doubled, the Ministry of Finance said on Wednesday.

The latest current account balance came in higher than the
consensus call for a Y1.520 trillion surplus. It followed a surplus of
Y1.047 trillion in June this year (-18.2% y/y) and Y1.205 trillion in
May (-8.1%), which showed the first year-on-year drops since July 2009
(-15.3%).

The wider current account surplus in July this year was due to a
higher trade surplus, as exports expanded at a faster pace than imports
compared with year-earlier levels. A smaller service deficit also
contributed to the rise in the current account surplus.

The July trade balance showed a surplus of Y916.1 billion, up
110.0% from a surplus of Y436.1 billion a year before, when it rose
41.9% y/y.

It was the second straight y/y rise following a 26.6% gain in the
trade surplus to Y769.0 billion in June this year.

Exports rose 24.7% year on the year to Y5.66 trillion in July. The
pace of y/y gains slowed from +29.2% in June, +33.8% in May, +42.7% in
April, +45.4% in March and a record rise of +47.3% in February (the
largest gain under the current formula dating back to 1986).

It was the eighth straight year-on-year rise in exports after
posting the first y/y gain in 15 months in December 2009, when exports
rose 11.8%.

Exports have recovered from the record 50.5% plunge in February
2009.

Based on customs-cleared data from the MOF’s monthly trade report
released last month, the rise in exports was led by automobiles (+27.1%
y/y in July), iron and steel products (+25.0%) and semiconductors
(+16.8%).

Imports increased 15.7% year-on-year to Y4.75 trillion in July,
posting the seventh consecutive y/y gain after +29.6% in June, +37.8% in
May, +26.1% in April and recovering from the record 44.9% drop hit in
February 2009.

On a customs-cleared basis, the import rise was led by petroleum
(+28.0% y/y in July), liquefied natural gas (+44.7%), iron ore (115.9%)
and non-ferrous metals (+65.5%).

The price of crude oil rose 9.2% from a year earlier to $79.32 a
barrel in July (vs. +34.2% y/y in June) while the Japanese currency
appreciated by 7.2% from a year before to an average Y87.72 to the
dollar during the month (vs. +5.8% in June).

The services account — including transport, travel and financial
services — posted a deficit of Y177.8 billion in July, shrinking from a
deficit of Y284.7 billion a year earlier.

The combined goods and services accounts were in surplus by Y738.3
billion in July, up from the surpluses of Y151.5 billion a year before
and Y658.8 billion in the previous month.

The income account posted a surplus of Y1.022 trillion, down from
the surplus of Y1.242 trillion a year earlier but up from Y462.1 billion
in the previous month.

tokyo@marketnews.com
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