Japan Trade Surplus Widens; Service Industries Expand
Dec. 22 (Bloomberg) -- Japan's trade surplus widened for the first time in eight months and the nation's service industries expanded more than expected, adding to evidence that the world's second-largest economy will grow for a fifth year.
The November trade surplus rose to 600.6 billion yen ($5.1 billion) from 597.3 billion yen a year earlier, the Ministry of Finance said in a report today. An index measuring services provided by industries including construction and transport rose 1.2 percent in October from September, beating the 0.7 percent median estimate of 33 economists in a Bloomberg survey.
Japan's economy is forecast by the government to accelerate 1.9 percent next fiscal year from an annualized 1 percent in the third quarter as companies including Toyota Motor Corp. and Matsushita Electric Industrial Co. expand to meet demand.
``Exports have been rising at an unexpectedly strong pace and fueling companies' profits and investment, adding an extra momentum to growth,'' said Azusa Kato, an economist at Barclays Capital Japan. ``Japan's economic expansion is being driven by the twin engines of domestic and foreign demand.''
Japan's third-quarter growth was led by a 1.6 percent increase in capital spending and a 0.4 percent gain in spending by consumers.
Japan's economy will show moderate and lasting growth in 2006, Bank of Japan Governor Toshihiko Fukui said today. Consumer prices will probably show stable gains early next year and the chances that the central bank will end its deflation- fighting policy are rising, he said.
Record Sales
The yen was little changed at 117.56 against the dollar at 4:36 p.m. in Tokyo, from 117.49 just before the report was released. The median forecast of 32 economists in a Bloomberg survey was for a trade surplus of 612.8 billion yen.
Toyota, Japan's largest automaker, said on Dec. 20 that it may sell a record 2.46 million cars, vans and trucks in the U.S. market in 2006, a gain of almost 10 percent from this year. Honda Motor Co. said on the same day its U.S. sales will rise 4 percent to top 1.5 million units for the first time.
Matsushita, the world's largest consumer-electronics maker, said Dec. 2 it will increase plasma panel production capacity 44 percent to meet demand for its Panasonic-brand televisions.
Exports in November climbed 14.7 percent to 5.91 trillion yen, the second highest ever. Imports advanced 16.6 percent to a record 5.31 trillion yen.
November exports to Asia climbed 14.7 percent to 2.83 trillion yen, the third highest ever. Imports from Asia rose 12.6 percent to 2.36 trillion yen, a record. Exports to China advanced 24.5 percent to 835.8 billion yen. Chinese imports rose 15.2 percent to a record 1.15 trillion yen.
Yen's Decline
The yen has lost 5 percent against the dollar over the past three months, making Japanese-made goods more competitive in overseas markets. The yen has declined 13 percent against the dollar this year.
Japan's largest manufacturers projected the yen to trade at an average 108.23 against the dollar the fiscal year ending March 31, the Bank of Japan's quarterly Tankan survey showed on Dec. 14. That compares with the 105.18 prediction they made in the bank's October survey.
Expansion by companies is prompting demand for workers, and increasing wages. The job-to-applicant ratio in October, which shows how many jobs are available to a job seeker, rose to the highest since October 1992, the government said Nov. 29. Winter bonuses paid by Japanese companies climbed 3.5 percent from last year, the biggest gain since 1991, according to a Nihon Keizai newspaper survey published Dec. 13.
Imports will also keep increasing as Japan's fifth straight year of economic expansion prompts companies and consumers to buy more goods from overseas, offsetting the lower costs for purchases of crude oil, said Naoki Iizuka, chief economist at Dai-Ichi Life Research.
Growth Projections
The seasonally adjusted trade surplus rose 1.4 percent to 708.1 billion yen in November from October. Economists surveyed by Bloomberg expected it to be 784.9 billion yen.
Machinery and telecommunications led the increase in Japan's service sector, which accounts for about 60 percent of all of Japan's industries.
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