So what was the more important news from Japan yesterday?
The 85% drop in its trade deficit in April from a year earlier (that’s around a surplus of nearly 69 billion yen or $A920 million)?
That was actually a lot better than the market estimate for a deficit of 69.5 billion ($A928 million). Exports rose 1.9% in April from March, which in turn were a little higher than February.
That’s another ‘bull point’ according to some economists.
Or was it the slowing in the rate of fall in exports? Down 39.1% in April from April 2008, an improvement compared with a year-on-year drop of 45.5% in March and a record fall of 49.4% in February.
Or was it the 35.8% fall in imports last month from a year earlier? That was marginally better than March’s 36.7%.
If you answered all of these, you get a prize, but you could also get a black mark given that the export and import figures continue to tell us that the Japanese economy is trapped in a very deep recession.
Exports to the US market were down 46%, 43% to western Europe and 48% to Australia.
There was a 25.8% fall in exports to China, which is better than previously reported and another sign that the Chinese economy is doing a bit better than the rest of Asia.
Exports and imports to South Korea, Singapore, South Korea, Thailand and Malaysia were all down 30% or more.
Imports from the US were down 29.3% and 11.8% for Australia, but that will worsen with new, lower iron ore and coking and thermal coal price contracts arranged.
Imports of computer equipment, iron ore and other commodities were down sharply (oil was only off 11%, coal, mostly coking , was down more, 25% and iron ore down 43%. LNG was down 7.9%.
That tells us that Japan’s manufacturing and export machine is still in a deep freeze.
Japan’s great skill is to take commodities from around the world and turn those into high priced manufactures of varying complexities, for export in whole, or in part into the production chains of China or the US.
That isn’t working and despite the undoubted slowing in the rate of fall in April, that’s the real message, but you have to dig into the Japanese government’s trade figures linked here.
It was Japan’s third straight monthly surplus, following a record deficit in January when the global economic downturn slashed worldwide demand for Japanese cars, electronics and other goods.
It wasn’t alone, Taiwan, China, South Korea and Europe, especially Germany, saw huge falls in exports as well.
Japan announced last week that its economy suffered its sharpest contraction on record in the March quarter, contracting by 4% from the December quarter, which was down 3.8% from the third quarter. This quarter will see a small contraction, which is good news.
But like the US and Europe it raises the question, where to next for the economy, industries and businesses.
Where’s the demand going to come from to lift output and activity levels and start cutting the rising tide of jobless?
The Japanese government and the central bank have both upgraded their assessments of the economy for the first time in more than three years, saying that while the situation was still tough the rate of the worsening has moderated.
Japan entered recession in the second quarter of 2008. When it leaves is still a matter for wild eyed conjecture.
But one thing is certain: it will take years for the country to rebuild itself. Industrial production should start growing slowly this month and last as more car plants and other production lines are restarted after being shut off and on for the past six months or more or capacity slashed.
The very sharp falls in the December and March quarters have slashed the size of the Japanese economy to its 2003 size.
Exports are around half what they were a year ago and industrial output (its heart) is down around a third on a year ago.
That’s a terrible state of affairs. It means a big cut in income if growth doesn’t restart soon.
