Deep Dive:Imports,A bit of strength would be reassuring

Event

October import data was released in the trade balance statistics: -2.5% YoY. The“imports by items” data is now available.

Impact

One of the major contributors to Japan’s 3Q real GDP growth (YoY 0.9%, QoQsaar 2.2%) was the decline in imports (YoY -3.1%. QoQ saar -2.4%).

The monthly trade balance statistics provide the first look at October data forgoods imports. The monthly Balance of Payment statistics contain the servicestrade balance. As shown below, the principal YoY volume weakness in importsover July to September by item was mineral fuels. The lower table has importsby country of origin. Imports from China over July to September were weak.

In October, imports from China remained weak, -5.0% YoY.

Domestic demand growth to 3Q 2016 was anaemic (YoY 0.3%, QoQ saar0.1%). To be consistent with this, import growth should not be shrinking at 2.0-3.0%. Weakness at this rate has persisted in October. We want to see the YoYimport growth rate recover in the November release.