Japan continues to do it tough, no matter what the economists say.
That tentative rebound in exports since February encouraged a small recovery in industrial output and in optimism that the economy would grow this quarter.
But figures out yesterday showed the bounce came to a halt in May, according to preliminary figures released in Tokyo.
The recovery in exports and industrial production was a much mentioned ‘green shoot’ about the Japanese economy and led some analysts to forecast growth of an annual 1.5% this quarter after the sharp falls in the December and March periods.
But Japan’s exports in May fell 40.9% from May of 2008 (but better than the 49% fall in the year to February); and were down 0.3% from April in the first month on month fall since February.
The May outcome was worse than the 29.3% fall forecast from the market.
April saw a reported 39.1% fall in exports from the same month of 2008, leading analysts to forecast a slight recovery in the economy in the June quarter.
Imports fell 42.4% from a year earlier, and the trade surplus shrank 12.1% to 299.8 billion yen (or $US3.1 billion), according to the Finance Ministry’s report.
That was better than forecast, which is a small positive.
That’s a sign that the recession in the Japanese economy remains deep, despite many analysts claiming they could see an easing. 45.5% in March and a record fall of 49.4% in February.
Imports fell 35.8% fall in April from April 2008, after March’s 36.7% fall, so the May figure was a noticeable worsening.
That was as much due to falls in the value of some imports, but oil imports cost more as world prices rose.
The importance of this news can be overstated; but when added to the fact that Chinese exports fell in May by more than the market expected (and against market expectations), and European and German exports turned down in April, the last reported month, there’re signs the global economy is not in any sort of recovery phase.
The freefall seen in December 2008 to around February of this year is over, but there’s just no recovery in demand at the moment, anywhere.
China is sucking in raw materials to turn into domestic products, not exports.
The Chinese Government has hinted twice in the past fortnight that its hopes for an 8% rise in exports this year won’t be met.
A month ago these figures would have been ignored, a fortnight ago they would have been eyed suspiciously, now, after the World Bank downgraded growth for 2009 in its latest update this week
(After being outlined and all but ignored on June 11), news of a further slide in exports from one of the world’s biggest exporters, won’t be taken so lightly.
At the same time the rich country’s group, the Organisation for Economic Co-Operation and Development (OECD) forecast that unemployment in its 30 member countries could hit 57 million by the end of next year, up 20 million from the end of 2008.
The OECD said on the first two of a two day meeting in Paris that the rate of unemployment in the industrial world could reach 10% in 2010, the highest level since 1970s. That’s up from 7.8% in April.
"More than 57 million people will be unemployed in OECD countries by the end of 2010, according to OECD estimates, up from 37.2 million at the end of 2008, when the average unemployment rate was 6.8%.
"The expected increase will bring OECD-wide unemployment to 9.9% at the end of 2010, its highest level since the 1970s, with an average for the year of 9.8%.
"Unemployment touched a recent low point of 5.5% in the last quarter of 2007, standing at 31.6 million at the end of that year."
Unemployment is rising in Japan, the US, Europe, Australia: in every major economy.
It will go on rising even as world growth starts its expected recovery next year (Even the world bank says growth of around 2% next year).
But the more monthly figures we get from major exporters like Japan, China and Germany, the more those forecasts of a rebound (or rather, its strength), will be questioned.
Confidence surveys are on the up: the latest in Europe this week told of an easing in the intensity in the recession in manufacturing, but the European service sector saw a down turn which left no one any more confident about the outlook.
Slumping exports of manufactured goods, such as cars and car parts, computer and consumer entertainment, iron and steel, chemicals and paper were the main reasons for the overall decline, while falls in raw materials of all kinds were the main drivers in the weak import figures.
As Japan exists by converting imports into higher valued exports, the 42% slump in May tells us that the country’s manufacturing sector remains deep in the grip of recession.
Exports to the US fell 45% in May from May 2008; to the EU they were down 45%, to Australia off nearly 48% (and imports from Australia were down 38%).
Exports to the US market were down 46% in April, 43% to western Europe and 48% to Australia, so no change here either.
The only "good news" was the 29.7% fall in exports to China and the 32% fall in imports. (Exports to China in April were down 28.8%).
The trade surplus with the United States was down 52.9% in May from a year earlier while that with the European Union slid 75% cent.
The deficit with China shrank sharply to Y860 million ($A11.35 million) from Y40.5 billion ($A534.51 million) a year ago.
That does indicate that
