November 20, 2014 / 1:37 AM / 3 years ago

UPDATE 3-Japan exports grow strongly in Oct, cutting economic gloom

(Adds details on decline in yen)
    * Oct exports +9.6 pct y/y vs f'cast +4.5 pct y/y
    * Flash PMI says Nov output best since March
    * Oct export growth eases concern about global demand
    * Exports could help economy recover from recession

    By Stanley White
    TOKYO, Nov 20 (Reuters) - Japanese exports grew in October
at the fastest pace in eight months, an encouraging sign that
global demand could help the country recover from recession and
support the central bank's optimistic economic outlook.
    The 9.6 percent annual rise in exports in October was more
than double the 4.5 percent gain expected by economists in a
Reuters poll and faster than September's 6.9 percent
year-on-year increase.
    In another sign that the world's third-largest economy is
regaining its footing, a private flash survey conducted by
Markit/JMMA showed that factory output grew in November at the
fastest pace since March. 
    Policymakers were stunned by data this week that showed the
Japanese economy fell into recession as a sales tax hike weighed
on consumer spending and business investment. But growing
exports and output could help lift some of the gloom surrounding
the economy. 
    "The trade data shows that exports will contribute to growth
in the fourth quarter and help recoup some of the weakness we've
seen in Japan's domestic demand," said Shuji Tonouchi, senior
fixed income strategist at Mitsubishi UFJ Morgan Stanley
Securities.
    Accelerating exports could also be a positive for Japanese
Prime Minister Shinzo Abe, who has said he will call an election
amid growing doubts about his economic policies.
    Japan's exports jumped in October due to higher shipments of
cars, ships and electronics, finance ministry data showed.
    Exports to Asia, which account for more than half of
Japanese shipments, picked up to 10.5 percent in October from a
year earlier.
    Shipments to China slowed to a 7.2 percent annual rise in
October from an 8.7 percent pace the previous month as the
world's second-largest economy slows.
    
    SOLID SALES TO U.S.
    Exports to the United States rose 8.9 percent in October
from a year ago, double September's rate. 
    Total imports rose 2.7 percent year-on-year to October,
lower than the median poll estimate for 3.4 percent.
    October produced a trade deficit of 710.0 billion yen ($6.01
billion), less than the median forecast for a 1.05 trillion yen
deficit from a Reuters' poll of analysts.
    Japan's competitors have become increasingly worried that
Tokyo's reflationary economic policies were weakening the yen,
allowing Japanese firms to undercut their own exporters.
    Hitherto, there had not been much sign that Japan's
exporters were benefitting much from the weaker yen as most have
moved much of their production overseas.
    The yen has fallen around 30 percent versus the
dollar since Abe took office in late 2012. On Thursday, the yen
struck a seven-year low, trading just under 119 per dollar and
currency traders think it could go to 120 as early as next week.
    Despite strong gains made by exports in October, some
economists doubt whether the weak yen will sustain the trend.
    "It is premature to declare that exports will remain in an
upward trend," said Yoshiki Shinke, chief economist at Dai-Ichi
Life Research Institute. "We need more time to see if companies
will respond to the yen's decline by slowing their transfer of
manufacturing capacity overseas."
(1 US dollar = 118.0500 Japanese yen)
     

 (Editing by Richard Borsuk and Simon Cameron-Moore)

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