— Adds Details, Economist Comments From 11th Paragraph
— Japan Jan Trade Deficit Y471.4 Bln Vs Surplus 60.98 Bln Yr Earlier
— Japan Jan Trade MNI Median Forecast: Y37.1 Bln Surplus, -39.1% Y/Y
— Japan Trade Balance Posts 1st Deficit Since March 2009
— Japan Jan Exports +1.4% Y/Y, Up 14 Months In Row
— Japan Jan Imports +12.4% Y/Y, Up 13 Months In Row
— Japan Jan Exports To US +6.0% Y/Y, Up 13 Months In Row
— Japan Jan Exports To EU -0.7% Y/Y, 1st Fall in 3 Months
— Japan Jan Exports To Asia +0.4% Y/Y, Up 15 Months In Row
— Japan Jan Exports To China +1.0% Y/Y, Up 15 Months In Row

TOKYO (MNI) – Japan posted the first trade deficit in nearly two
years in January, hit by holiday seasons, but its exports to global
markets were underpinned by recovering industrialized countries and
red-hot demand from emerging economies, Ministry of Finance data
released on Wednesday showed.

Japan marked a trade deficit of Y471.4 billion last month,
reversing a year earlier surplus of Y60.98 billion. It was the first
deficit since March 2009.

The January figures came in much weaker than the median forecast by
economists in a Market News International survey — a drop of 39.1% y/y
to a surplus of only Y37.1 billion.

January’s deficit followed a downwardly revised surplus of Y725.85
billion in December (preliminary +Y727.7 billion), which was up by a
revised 33.8% from a year before.

A deficit in January is not unusual — even without an external
shock such as the collapse of Lehman Brothers — as operations for
exports are often hindered by year-end and new year’s holidays in Japan.

In the month of January, the trade account was in deficit by Y968
billion in 2009, Y106 billion in 2008 and Y394 billion in 2006.

The slowdown in January this year was also due to slower shipments
to China in late January ahead of the Lunar New Year holidays on Feb
2-8, a MOF official said.

But global shipments maintained a rising trend in January, although
the pace of growth slowed for the first time in three months as
shipments to China slid from a record high of Y1.285 trillion in
December.

Japanese exports rose 1.4% in January from a year earlier to Y4.97
trillion, the 14th straight year-on-year gain, but the pace of export
growth slowed from a revised +12.9% in December and was below the recent
peak of +45.3% marked in February 2010.

It was the lowest rate of growth since -6.3% marked in November
2009.

Shipments of mineral fuels, iron and steel products as well as
construction machinery led the gain in January exports while
semiconductor shipments dropped.

Imports gained 12.4% to Y5.44 trillion in January, posting the 13th
consecutive y/y rise, on purchases of crude oil, iron ore and refined
petroleum products.

The pace of growth accelerated from +10.6% in December.

“We need to watch February data to assess the magnitude of the
impact of the Lunar New Year holidays on exports to China and other
Asian nations,” Tatsushi Shikano, senior economist at Mitsubishi UFJ
Morgan Stanley Securities said, adding that it is premature to judge
that the underlying recovery trend of exports has changed.

But at the same time he called for a close watch on whether the
withdrawal of stimulus measures in China will have any lasting impact on
demand there

“While overall exports seem to be on the mend, we may need to
carefully watch the unrest in the Middle East and its impact on trading
activity in the region,” said Shikano.

By region, exports to the U.S. rose 6.0% from a year earlier to
Y752.90 billion, posting the 13th consecutive y/y rise.

The pace of growth decelerated from +16.5% in December but
accelerated from +1.2% in November. It was well below the recent peak of
+50.5% in February 2010.

Shipments of construction machinery, iron and steel products as
well as metalworking machinery led the increase in U.S. exports.

Exports to the European Union fell 0.7% to Y575.90 billion in
December, posting the first y/y drop in three months, following a rise
of 9.7% in December.

The decrease was led by declines in shipments of computer parts,
semiconductors and visual apparatus, which outpaced higher shipments of
metalworking machinery and mineral fuels.

Japan’s exports to Asia edged up 0.4% to Y2.73 trillion in January,
marking the 15th consecutive month of y/y gains but slowing from +14.8%
in December and far below the recent peak of +68.3% in January 2010.

Higher shipments of mineral fuels, iron and steel products as well
as automobiles led Japanese exports to Asia.

Exports to China, the largest market for Japanese goods, rose only
1.0% to Y928.83 billion in January after surging 20.1% to a record high
of Y1.285 trillion in December.

It was the 15th consecutive y/y rise but the rate of increase has
slowed from the recent peak of +80.0% in January 2010.

Shipments of automobiles, construction machinery and power
generating machines led the gain.

On a seasonally adjusted basis, Japan’s trade surplus posted a
surplus of Y191.77 billion in January, down 66.9% from the previous
month following a 31.9% m/m rise in December.

Seasonally adjusted exports rose 1.0% in January following a 5.7%
rise in December while imports gained 8.5% after +3.0% in December.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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