Japan's customs authority reported record monthly export and import values for July, but growth in what the country buys from abroad outran what it sells, widening the trade deficit sharply from a year earlier.
The headline numbers
Exports rose 23.2% year-on-year to ¥11.51tn, the eleventh straight month of increase and the highest export value on record for any month, not only for July. Imports climbed further, up 27.8% to ¥12.15tn, the sixth consecutive monthly rise and also an all-time high. The gap between the two came to ¥634.5bn, up 306% from the ¥156.3bn deficit posted in July a year earlier. It is the third straight month Japan has run a deficit.
On a seasonally adjusted basis, which strips out the usual monthly pattern, exports rose 2.8% from June to ¥10.88tn, while imports edged up only 0.4% to ¥11.57tn. The adjusted balance came to a ¥686.0bn gap.
Why imports outran exports
Autos and semiconductor-related electronic components led the export gains. On the import side, crude oil and semiconductor-related electronic components again dominated. The customs bureau's own volume indices show the value totals overstate the underlying trade flow: export volumes rose just 5.2% and import volumes only 1.2%, both far behind the yen totals. Currency did the rest of the work. The average customs exchange rate for July was ¥161.83 to the dollar, against ¥145.56 a year earlier, an 11.2% weaker yen that inflated the yen cost of every dollar-priced import, oil included.
The partner-by-partner picture
| Partner | Exports | YoY change | Imports | YoY change | Balance |
|---|---|---|---|---|---|
| World total | ¥11.51tn | +23.2% | ¥12.15tn | +27.8% | -¥634.5bn |
| United States | ¥2.09tn | +22.0% | ¥1.81tn | +58.0% | +¥280.4bn |
| European Union | ¥1.03tn | +19.1% | ¥1.12tn | -2.3% | -¥87.1bn |
| Asia | ¥6.32tn | +24.5% | ¥6.08tn | +32.1% | +¥237.9bn |
| China | ¥2.01tn | +25.8% | ¥2.78tn | +26.2% | -¥775.4bn |
The United States told the sharpest story. Exports to the US rose 22.0% to ¥2.09tn, a record for any month and any July. Imports from the US jumped 58.0% to ¥1.81tn, the twelfth straight monthly increase, and Japan's surplus with Washington shrank 50.7% to ¥280.4bn, the eighth consecutive month of decline.
China moved on both sides of the ledger at once: exports rose 25.8% and imports rose 26.2%. Because Japan buys far more from China than it sells there, the deficit with Beijing widened 27.2% to ¥775.4bn, the 64th consecutive monthly deficit. The European Union broke the pattern: exports grew 19.1% to ¥1.03tn while imports fell 2.3% to ¥1.12tn, the first monthly import decline in six months, narrowing the EU deficit by 68.9% to ¥87.1bn. Asia as a whole ran a ¥237.9bn surplus, the sixth straight surplus month, even as that surplus shrank 49.6% from a year earlier because imports (+32.1%) grew faster than exports (+24.5%).
What the record hides
The finance ministry's own long-run rankings put the July figures in context: both the export and import totals are the highest ever recorded for any month, and the highest for any July on record. The deficit tells a different story. At ¥634.5bn, it ranks 504th among the 571 months tracked since January 1979, and 46th among the 48 Julys in that record. Record sales abroad have not produced a record surplus; a weaker yen and costlier energy imports are eating into the gains. The figures are preliminary and subject to revision when the finalized release follows.