By Dow Jones Business News,
December 17, 2013, 08:35:00 PM EDT
TOKYO--Nearly a year after major policy steps by Prime Minister Shinzo Abe to lower the yen, Japanese exports finally
showed signs of perking up in November, with exports of cars rising especially sharply--good news for an economy likely
to suffer a hit when the sales tax goes up in April.
The volume of merchandise exports in November--seen as a more reliable gauge of underlying strength than value terms--
rose 6.1% from a year earlier, the Ministry of Finance announced Wednesday. The increase was the sharpest in a year and
a half, and compares with a 4.4% rise in October.
Economists have been concerned by previous trade data showing export volumes growing tepidly, even though the yen has
fallen 18% against the dollar over the past year. But the latest figures suggest the weaker currency is starting to help
exports gain traction, as Japanese products become cheaper in the global market.
"The volume of Asia-bound exports--including those to China--is showing clear signs of an uptrend," said Takeshi
Minami, chief economist at Norinchukin Research Institute.
Exports to Asia rose 5.9% in volume terms, the most in more than two and a half years, offsetting a slowdown to the
U.S. and Europe.
Japanese manufacturers exported a total 512,432 automobiles in November, up 9.4% from a year earlier, the fastest rise
in about a year and a half. They also shipped 67,000 motorcycles, up 7.0%, faster than the previous month's 4.5% rise.
Even though the yen began its steep decline late last year, Japanese firms haven't made dramatic cuts in the prices of
goods in overseas markets. Analysts say that like their foreign competitors, they tend to keep prices in line with
prevailing levels in target markets, and respond only slowly to exchange-rate changes. The Bank of Japan's index of
export prices in November was down only 2.6% from its peak in February.
But even that level of decline could still make a "big difference" over time, said Toshihiro Nagahama, chief economist
at Dai-ichi Life Research Institute. A public debate has indeed been going on for months on whether a three-percentage-
point sales-tax increase in April will cause Japan's economy to falter. "Some consumers buy things when their prices
fall by just by a penny," Mr. Nagahama said.
Japanese exporters' foreign rivals are facing opposite pressure to raise prices relative to Japanese products because
of exchange-rate changes, economists said.
Japanese officials see rebounding exports as crucial for the economy to continue recovering steadily beyond the tax
increase, which will likely hurt consumption, a main growth driver this year.
Exports account for only 15% of Japan's total economic output, much lower than for other Asian export powerhouses, but
they may hold the key to future growth. Many Japanese manufacturers make key decisions, such as business investment and
wage rises, based on export performance because they generally have low expectations for domestic demand as the
country's population ages and shrinks. This is partly why economists pay more attention to exports to gauge Japan's
economic outlook than its ballooning trade deficit.
Economists note, however, that the changing structure of Japanese manufacturing could limit export growth. Electronics
makers are shifting to a strategy of exporting parts and importing final products, said Yasunari Ueno, chief market
economist at Mizuho Securities. Other manufacturers are increasingly making goods at overseas factories for sale in the
global marketplace, he said.
"It isn't appropriate to pass judgment on exports looking only at a couple of months' data," Mr. Ueno said.
Write to Takashi Nakamichi at email@example.com
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