— Japan Aug Surplus at Y1.114 Trln; July Y1.676 Trln, +26.1% Y/Y
— Smaller Surplus Due To 1st Y/Y Drop In Trade Surplus In 15 Mths

TOKYO (MNI) – Japan’s current account posted a surplus of Y1.114
trillion in August, down 5.8% from the surplus of Y1.183 trillion a year
earlier, marking the first year-on-year drop in two months as the trade
surplus showed the first y/y drop in 15 months, the Ministry of Finance
said on Friday.

The latest current account balance came in higher than the
consensus call of a Y999.8 billion surplus. It followed surpluses of
Y1.676 trillion in July (+26.1%) and a revised Y1.058 trillion in June
(-17.3% y/y). In May, the surplus shrank a revised 6.8% to Y1.223
trillion, the first year-on-year drop since July 2009 (-15.3%).

The narrower current account surplus in August this year was due to
a drop in trade surplus as imports grew at a faster pace than exports
compared with year-earlier levels, which more than offset combined
effects of a higher income surplus and a smaller service deficit.

The August trade balance showed a small surplus of Y195.9 billion,
down 35.2% from a surplus of Y302.1 billion a year before.

It was the first y/y drop in 15 months following a 110.0% gain in
the trade surplus to Y916.1 billion in July this year.

Exports rose 16.5% year on the year to Y4.93 trillion in August.
The pace of y/y gains slowed from +24.7% in July, a revised +29.1% in
June, a revised +34.0% in May and a record rise of +47.7% in February
(the largest gain under the current formula dating back to 1986).

It was the ninth 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 (+18.7%
y/y in August but -8.3% to the U.S. and -0.3% to the EU), iron and steel
products (+26.2%) and metalworking machinery (+98.7%).

Imports increased 20.5% year-on-year to Y4.74 trillion in August,
posting the eighth consecutive y/y gain after +15.7% in July, a revised
+29.7% in June and a revised +37.7% in May and recovering from the
record 44.9% drop hit in February 2009.

On a customs-cleared basis, the import rise was led by liquefied
natural gas (+55.9% y/y in August), iron ore (+106.8%) and non-ferrous
metals (+54.6%).

The price of crude oil rose 9.8% from a year earlier to $74.66 a
barrel in August (vs. +9.2% y/y in July) while the Japanese currency
appreciated by 9.9% from a year before to an average Y85.47 to the
dollar during the month (vs. +7.2% in July).

The services account — including transport, travel and financial
services — posted a deficit of Y94.9 billion in August, shrinking from
a deficit of Y109.9 billion a year earlier.

The combined goods and services accounts were in surplus by Y101.0
billion in August, down from the surpluses of Y192.2 billion a year
before and Y738.3 billion in the previous month.

The income account posted a surplus of Y1.108 trillion, up from the
surplus of Y1.061 trillion a year earlier and Y1.022 trillion in the
previous month.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5408-4833 **

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