Japan Exports Slide Slows in Sign Recession May Ease

By Jason Clenfield

April 22 (Bloomberg) -- Japan’s export slump slowed in March, ending a four-month streak of record drops and adding to signs the recession may start to ease.

Overseas shipments slumped 45.6 percent from a year earlier, compared with February’s unprecedented 49.4 percent plunge, the Finance Ministry said today in Tokyo. Economists predicted exports would drop 46.4 percent.

Shipments to the U.S. and China, Japan’s two largest markets, fell at a slower pace. Federal Reserve Chairman Ben S. Bernanke said last week the “sharp decline” in the U.S. may be slowing. Goldman Sachs Group Inc. today raised its economic growth forecast for China to 8.3 percent this year from 6 percent previously, citing Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus package.

“It looks as if the fog has cleared and the worst is over,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “But the downturn that began with the slump in overseas demand is spreading to the domestic economy.”

The Nikkei 225 Stock Average climbed 0.8 percent at 10:05 a.m. in Tokyo. The yen traded at 98.58 against the dollar from 98.60 before the report was published.

Exports to China sank 31.5 percent compared with a 39.7 percent drop in February. Shipments to the U.S. fell 51.4 percent in March after a 58.4 percent drop the previous month.

Japanese manufacturers planned to increase output in March and April, ending a five-month drop, a government report showed last month. Gauges of confidence among consumers, merchants and small businesses all rose in March.

‘Hit Bottom’

“We’re seeing that the ground is being built for the economy to hit bottom by the end of this year,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Co. in Tokyo. Still, “the pace of the recovery will be very moderate.”

Gross domestic product may have contracted at an annual 10.9 percent pace in the first quarter, economists surveyed by Bloomberg predict, after shrinking 12.1 percent pace in the previous three months, the steepest drop since 1974.

Bank of Japan Governor Masaaki Shirakawa said this month that weakening spending by companies and consumers will impair growth even as declines in exports and production moderate. The central bank’s Tankan survey of business sentiment this month showed plunging demand has saddled companies with too many employees, signaling unemployment is likely to rise from its current level of 4.4 percent.

31-Year Low

Toyota Motor Corp., Japan’s largest automaker, may cut domestic production in the current business year to a 31-year low, the Yomiuri newspaper reported yesterday. Output will fall 30 percent from its 2007 peak, putting pressure on the automaker to start cutting full-time workers, the newspaper said.

Prime Minister Taro Aso this month unveiled a record 15.4 trillion yen ($156 billion) stimulus plan, a bid to pull the economy out of its deepest recession since 1945. The package will boost gross domestic product by 2 percentage points this fiscal year and create up to 500,000 jobs a year, the government said.

Toshiba Corp. last week said it will cut 3,900 temporary jobs this fiscal year, on top of 4,500 eliminations announced in January. The chipmaker will also reduce research and development spending by 18 percent.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net