Japan's exports rose to a record high in January as U.S.-bound auto shipments were robust, helping the nation halve its trade deficit from a year earlier to 1.76 trillion yen ($11.74 billion) as energy imports also slumped, government data showed Wednesday.
Exports increased 11.9 percent to 7.33 trillion yen, marking the second straight month of growth despite concerns about slowing global demand after aggressive interest rate hikes in the United States and Europe.
Imports of coal and liquefied natural gas fell by double digits, leading the resource-scarce nation to report a 9.6 percent drop in overall imports, which came to 9.09 trillion yen.
The country posted a record 3.51 trillion yen trade deficit in January 2023, due to massive imports inflated by a weak yen. Comparable data became available in 1979.
Japan had a 415.04 billion yen trade surplus with the United States as exports hit their largest-ever level for the month, at 1.42 trillion yen. Imports rose 6.0 percent to 1.01 trillion yen.
Japan logged a 959.52 billion yen trade deficit with China, another major trading partner, even as its shipments were supported by strong demand for chip-making equipment and cars.
Exports jumped 29.2 percent to 1.25 trillion yen, a record, while imports dropped 7.6 percent to 2.21 trillion yen.
China-bound shipments tend to decrease during its Lunar New Year holidays. The holidays began in early February this year, later than in 2023, which may have contributed to the strong export number.
Japan's economy slipped into recession in the October-December period after two straight quarters of contraction, as strong exports failed to offset weakness in domestic demand -- private consumption and capital investment.
Economists are keeping tabs on the strength of external demand in the January-March quarter, a crucial factor for the Japanese economy, as major central banks like the U.S. Federal Reserve are expected to start cutting rates this year.
Another concern is the impact on auto production of recent safety test scandals at Daihatsu Motor Co., the small-car manufacturing unit of Toyota Motor Corp., and Toyota Industries Corp.
Still, Kota Suzuki, an economist at Daiwa Securities Co., said auto exports will likely remain solid, supported by the resilience of the U.S. economy.
"China-bound shipments came out strong, but this was likely because of last-minute demand (before the holidays.) Given China's export growth has been slowing, we need to look at more data to get a real picture," Suzuki added.
A 585.66 billion yen trade deficit was reported with the rest of Asia, which includes China, down nearly 60 percent from a year ago.
The trade balance with the European Union returned to the black, aided by a 13.8 percent increase in exports to 769.62 billion yen. Japan saw strong demand for electric vehicles and auto parts from the Netherlands, according to the Finance Ministry.
Imports fell 10.1 percent to 764.89 billion yen.
Despite market expectations of an imminent shift from years of powerful monetary easing by the Bank of Japan, the yen remained weak relative to the U.S. dollar, inflating import costs for Japan. The Japanese currency was 9 percent weaker than in January 2023.
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