Japan Trade Surplus Surges on Exports of Autos, Steel (Update2)

By Lily Nonomiya


Sept. 26 (Bloomberg) -- Japan's August trade surplus was three times higher than economists predicted as car and steel shipments jumped and import growth slowed.

Exports rose at more than twice the pace of imports, the Finance Ministry said in Tokyo today, increasing the surplus to 743.2 billion yen ($6.5 billion). The median estimate of 37 economists surveyed by Bloomberg News was for the gap to swell 23 percent from a year earlier to 235.5 billion yen.

Shipments to Europe and Asia rose to records for the month, and may help Japan weather a slowdown in the U.S., the country's largest overseas market. The International Monetary Fund said this week that global economic growth will probably cool next year because of a credit shortage triggered by the collapse of the U.S. subprime mortgage market.

``Export growth was quite high,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management in Tokyo. ``Still, slower global growth is a risk that needs to be watched closely as well as the impact of the subprime issue.''

The yen traded at 114.71 per dollar at 10:14 a.m. in Tokyo from 114.57 before the report was published.

Exports climbed 14.5 percent in August, faster than July's 11.8 percent, the ministry said. Economists expected growth in shipments to cool to 10.9 percent. Import growth slowed to 5.7 percent, a third of the pace of the previous month.

U.S., Europe

Shipments to the U.S. advanced 4.6 percent in August, accelerating from 1.3 percent. Exports to the European Union climbed 15.6 percent, faster than July's 13.1 percent. Growth in exports to China quickened to 23.8 percent from 20.6 percent.

``Demand in other regions, particularly Asia and Europe, is solid,'' Junko Sakuyama, a senior economist at Dai-Ichi Life Research Institute Inc. in Tokyo.

Honda Motor Co., Japan's second-largest carmaker, said sales in China surged 44 percent in July from a year earlier. For the first seven months of 2007, the company's sales surged 32 percent.

Canon Inc., Japan's most profitable office-equipment maker, said last month that sales in India rose 50 percent in the first half of 2007 as higher wages buoyed demand for digital cameras and copiers.

Until today, reports had signaled that Japan's economy was losing steam. Gross domestic product contracted at the fastest pace in more than three years in the second quarter as companies cut capital outlays. Wages had their biggest drop since 2004 in July, making it unlikely consumers will be able to drive growth should exports falter.

`Very Concerned'

Toyota Motor Corp., Japan's largest automaker, said U.S. auto sales slipped 2.8 percent last month as the subprime mortgage crisis hurt consumer sentiment. Analysts expect sales in the U.S. to slow this year as loans have become more costly and hard to obtain because of the credit squeeze.

``This is not just a problem about the housing market but also about people borrowing from finance companies to buy cars,'' Yoshio Ishizaka, a senior adviser to Toyota's board, said in an interview on Sept. 6. ``I am very concerned.''

IMF managing director Rodrigo de Rato said this week that global economic growth will probably be ``slightly less'' next year than in 2006 and 2007. ``We see no early resolution to the credit problems,'' he said. ``It's a serious crisis.''