Japan’s Export Growth Accelerates on Global Rebound

Feb. 24 (Bloomberg) -- Japan’s exports climbed at the fastest pace in almost 30 years in January, supporting the nation’s economic recovery as falling wages damp demand at home.

Shipments abroad advanced 40.9 percent from a year earlier, the biggest increase since February 1980, the Finance Ministry said today in Tokyo. The median estimate of 22 economists surveyed by Bloomberg was for exports to rise 39.5 percent.

The growth was led by the biggest advance in exports to China since 1985, while shipments to the U.S. increased for the first time in more than two years, spurring sales at manufacturers from Mazda Motor Corp. to Bridgestone Corp. More than $2 trillion in worldwide government spending has helped sustain Japan’s expansion, stimulus the economy needs to keep growing as its consumers pare spending.

“Exports will continue to be a driving force for the economy,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities Co. in Tokyo. “Still, given that the export recovery is driven by stimulus measures, this won’t be enough to benefit households and help Japan return to a path of self- sustained growth.”

The yen traded at 90.20 against the dollar at 9:58 a.m. in Tokyo, compared with 90.24 before the report was released. Exports rose a seasonally adjusted 8.6 percent from December.

Japan posted a trade surplus of 85.2 billion yen in January, better than the median prediction for a 136 billion-yen deficit. Imports rose 8.6 percent, the first increase since October 2008, today’s report showed.

Favorable Comparison

The improvement in exports was partly due to a favorable year-on-year comparison. In January 2009, shipments abroad tumbled 45.7 percent as global trade froze in the aftermath of the collapse of Lehman Brothers Holdings Inc. in the previous September.

A government report last week showed that Japan’s economy expanded at an annual 4.6 percent rate last quarter. The export- led recovery was driven by Asia, especially China, where gross domestic product accelerated to the fastest pace since 2007 last quarter. The nation is Japan’s largest overseas customer.

Mazda Motor plans to increase production capacity in China to meet growing demand in the world’s biggest car market. The automaker aims to boost China sales 22 percent this year.

Bridgestone, the world’s largest tiremaker by sales, forecast a more than 40-fold increase in 2010 profit on rebounding auto sales in Japan, the U.S. and Europe.

Exports to Asia advanced 68.1 percent in January from a year earlier and shipments to China climbed 79.9 percent.

U.S. demand is also improving after a report last month showed the nation’s economy expanded the most in six years last quarter. Shipments to the U.S. rose 24.2 percent. Exports to Europe rose 11.1 percent.

Benefitting Consumers

The resurgence in demand hasn’t been benefiting consumers at home, who have been grappling with falling wages. BNP Paribas forecasts Japan’s economy will grow an annualized 1.2 percent in the three months ending March, less than half last quarter’s pace.

Demand for services slipped at the fastest pace in nine months in December and retail sales have slid for 13 months. The impetus from government stimulus measures are also fading.

“The foundations for economic recovery are by no means rock solid, with frail domestic demand and a pronounced skew toward restocking and exports to Asia,” said Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs Group Inc. “In particular, January-March is in economic policy limbo and we expect near-zero growth.”

Japan’s construction machinery shipments will likely rise for the first time in three years in fiscal 2010, supported by continued demand in China and other Asian nations, according to the Japan Construction Equipment Manufacturers Association.

Toyota Motor Corp., the country’s biggest automaker, has recalled 8 million vehicles because of accelerator and brake problems.

The government lowered its evaluation of both exports and imports yesterday, saying they are increasing “moderately.” Shipments to Asia are slowing and there’s a need to monitor the effects of recent auto recalls, said Keisuke Tsumura, a parliamentary secretary at the Cabinet Office.