Global Demand Freefall Waning... Japanese Export Edition

The AP with the details:

Japan's exports in June fell by the smallest margin in six months, adding to evidence that global demand is recovering as the recession loosens its grip.

Shipments from the world's second-biggest economy fell 35.7 percent from a year earlier, an improvement from a 40.9 percent decline in May, the government said Thursday. Exports have fallen every month since October.

As a result of a bigger fall in imports, Japan posted a trade surplus of 508 billion yen ($5.4 billion) — the highest value since March 2008, according to the Ministry of Finance.

Export declines eased in all of Japan's major markets, particularly China. Huge stimulus spending by Beijing helped Chinese growth accelerate in the second quarter, expanding by 7.9 percent from a year earlier.

Exports to Asia and the U.S. are showing the clearest recovery, said Richard Jerram, chief economist at Macquarie Securities in Tokyo.

I've posted on this in the past, but we can see the growing importance of China to any Japanese recovery. More important, we can see the bounce not only in Chinese exports, but those to the U.S. as well.

The composition of exports to each country is widely varied and the good news is that we are seeing a stabilization of exports to both. The U.S. is a much larger market for transportation equipment (i.e. autos), whereas China is the larger market for machinery (needed for the continued industrial expansion) and manufactured goods.

It will be interesting to follow how this plays out in the coming months. We should be able to see the impact of the cash for clunkers program has on exports to the U.S. and the continuation of China's stimulus plan on exports to China.

Source: Customs.Go.JP