Japanese trade data for July, deficit expectations were based on solid export growth but surging import growth
July trade balance Y -231.2bn … much bigger deficit than expected
- expected Y -41.2bn, prior 720.8bn (ie surplus)
Trade Balance (adjusted) Y -45.6bn … miss
- expected Y 20.7bn, prior Y 66.2bn
Exports +3.9% y/y
- expected +6.3%, prior +6.7%
Imports +14.6% y/y
- expected +14.2%, prior +2.6%
Wow, that export growth figure is much worse than expected, creating a bigger trade deficit on the month than expected
And, ladies and gentlemen, the trade war is only going to get worse (before it gets better). I been saying this for a looooong time.
This will be a yen negative at the margin, to the extent that export growth has been a bright spot in the Japanese economy (domestic demand is struggling still due to slow wage growth … a familiar story) a slowing is not a positive for the economy and prompts thoughts the BOJ will be lower for longer (they are anyway, but still).
Some further detail (the one that matter first...):
- July exports to the US down 5.2% y/y (have I mentioned the trade war?)
- exports to China +11.9% y/y
- exports to Asia +8% y/y
