Nontheless year on year the numbers, while slightly better than in previous months, still look horrible. Shipments abroad fell 39.1 percent from a year earlier, after dropping 45.5 percent in March and a record 49.4 percent in February. From a month earlier, exports rose 1.9 percent on a seasonally adjusted basis, a the second straight monthly gain.
Sales to Europe were down 45.4 percent year on year, from 56.1 percent in March, and indeed exports to Europe were up 50 trillion yen (around 10%) on the month.
Shipments to the U.S. fell 46.3 percent last month, down from March’s 51.4 percent decline, but month on month they were stationary, with the declining annual decrease due entirely to what are known as base effects.
Shipments to China, which is now Japan’s biggest trade partner, fell 25.8 percent in April from a year earlier. The rate of decline thus fell for a third straight month, suggesting Beijing’s $585 billion stimulus package is having an effect, at least as far as Japan exports go. Month on month exports to China we more or less stationary, but they are up around 60% from January's low point. In fact shipments to China are now about a third larger than those to the US, and 40% larger than those to the EU.
Among shipments to China, the Finance Ministry singled out chemicals used to make plastics, mobile phones and digital cameras as actually rising in April from a year.
While there is no doubt that sentiment has begun to improve in Japan’s largest Western markets, it is far from clear that global demand will recover at this point enough to allow Japanese companies to go beyond restocking after a heavy run-down of inventories. And like Japan, China’s economy is driven mostly by exports, so unless we see a stable pickup in global demand recovery there will remain limited. And with US financial markets now funding a large chunk of the carry trade, the yen seems trapped around 95 to the dollar as far ahead as we can see. And all of this, of course, bodes ill for Japanese companies.
Export performance across Asia has been mixed recently. Shipments abroad fell at a slower pace in Taiwan and South Korea last month from March, but both Singapore and China suffered larger drops. Two quarters of record contractions in GDP have now shrunk the Japanese economy to around the 2003 level. Even as declines in overseas shipments moderate, Japan is exporting little more than half as much as last year and producing a third less. And the recession is now spreading to consumers as companies fire workers and cut wages to minimize losses.
Nonetheless Bank of Japan Governor Shirakawa is putting on a brave face, and said this week that the economy may return to growth in the current quarter, although he immediately qualified this by underlining that any recovery will “inevitably be mild.” At their April 30 meeting, a few Bank of Japan board members even went so far as to say that additional policy measures weren’t necessary amid the signs that the economy will recover, albeit gradually and after “some time,” according to the minutes released last week. Since the Bank of Japan has got a track record of underestimating the severity of the recessions which have struck since 1992 let's just hope that history isn't repeating itself again this time.