By Keiko Ujikane - Jul 9, 2012 7:40 AM GMT+0700
Japan’s current-account surplus was the smallest in May since at least 1996 and machinery orders fell the most in more than five years, adding to signs a slump in demand is threatening the nation’s rebound.
The excess in the widest measure of the nation’s trade shrank 62.6 percent from a year earlier to 215.1 billion yen ($2.7 billion), the Ministry of Finance said in Tokyo today. The median estimate of 24 economists surveyed by Bloomberg News was for a surplus of 493.1 billion yen. Machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said, the biggest drop since comparable data were made available in 2005.
Yoshihiko Noda, Japan's prime minister, gave approval for a restart of reactors at the Ohi nuclear plant. Photographer: Haruyoshi Yamaguchi/Bloomberg
The Bank of Japan raised its economic evaluation of all regions for the first time in more than two years. Photographer: Tomohiro Ohsumi/Bloomberg
Japan’s trade position has weakened due to growing energy imports after last year’s earthquake and nuclear meltdown and also the yen’s gain of 4.9 percent against the dollar since mid- March. Prime Minister Yoshihiko Noda gave approval for a restart of reactors at the Ohi nuclear plant, which resumed power generation last week, to avoid power shortages and rolling blackouts over the summer.
“The restart of a Ohi nuclear reactor itself will only have limited impact on energy imports,” unless there will be more developments on a restart of other nuclear plants, Itochu’s Maruyama said.
Trade Deficit
Japan posted an 4.4 trillion yen trade deficit in the fiscal year that ended March 31 as energy imports rose and exports fell due to the yen’s gains and weak demand in Europe and Asia. Income from investment abroad, which includes interest payments and dividends on equities and debt securities, has served as a buffer against a deficit in the current account balance.
The economy grew at an annualized 4.7 percent pace in the first three months of this year, a pace which probably cooled to 2 percent in the second quarter and about 1.5 percent in the last 6 months of 2012, according to a Bloomberg survey of economists.
The Bank of Japan (8301) raised its economic evaluation of all regions for the first time in more than two years, citing improvements in consumer spending and rebuilding demand from last year’s earthquake, it said in a report released last week.
Kansai Electric Power Co. (9503), the nation’s second-biggest generator, resumed electricity generation at its No. 3 reactor at the Ohi plant in central Japan on July 5. That ended a two- month period in which all 50 of the country’s reactors were off- line.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
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