— Replaces Some Figures With Revised Data, Clarifies 5th Paragraph
— See Separate Table For Details of Analysts’ Forecasts

TOKYO (MNI) – Japan’s trade surplus for October is expected to have
totaled Y875.7 billion, up 9.5% from a year earlier, posting growth for
the second straight month, according to the median forecast of analysts
surveyed by Market News International.

However, the rate of growth in the October surplus is expected to
have decelerated from a revised 52.8% y/y gain (preliminary +54.0%)
marked in September due to slower export growth and an acceleration in
imports.

In August, the surplus slumped a revised 49.2% from a year earlier.

The Ministry of Finance will release the data on Thursday, Nov. 25.

Yoshimasa Maruyama, economist at Itochu Corp, said growth in
October exports decelerated due to several factors, including slower
global economic growth and ongoing drawdowns in the previous inventory
buildup in the information technology sector.

North America-based manufacturers of semiconductor equipment posted
$1.59 billion in orders in October and a book-to-bill ratio of 0.98,
falling below the boom-and-bust line of 1.00 for the first time since
June 2009.

Analysts expect total exports to have risen only 11.1% on the year,
compared with a revised +14.3% (preliminary +14.4%) in September,
according to the median forecast of an MNI survey. The rate of growth
has decelerated from increases above 40% seen between January and April
this year.

According to the MOF, exports for the first 20 days of October rose
12.3%, led by automobiles, power generating machines as well as steel
and iron products.

In particular, the rate of increase in manufactured goods exports
has been decelerating recently.

Automobile exports rose only 12.0% on-year in September, in sharp
contrast to increases of over 100% between February and April. Exports
of electronic parts rose only 4.4% in September, also slowing from the
recent peak of +83.2% seen in January.

Recent drops in the Asian economic growth rate are also behind the
slowdown in export growth.

According to the Cabinet Office, seasonally adjusted export volume
fell 2.6% in September from the previous month, mainly because shipments
to Asia declined 2.7%, the largest drop since -19.4% in April 2009.

In contrast, the volume of exports to the U.S. rose 6.2% m/m while
those to the European Union rose 2.0% in September.

Imports are estimated to have risen 11.2% on the year in October,
following a revised +10.0% (preliminary +9.9%) in September and +17.9%
in August. Imports for the first 20 days of October increased by 12.9%
y/y, led by iron ore, liquified natural gas and nonferrous metals,
according to MOF data.

The average price of imported crude oil for Oct. 1-20 was $76.7 a
barrel, up 9% on year, compared with +4% y/y for the whole of September.

Kyohei Morita, chief economist at Barclays Capital Japan, forecast
that a drop in October-December net exports (exports minus imports) will
push down Japan’s Q4 GDP growth, as both the strong yen and the slower
U.S. and Chinese economic growth are hurting exports.

But he added net exports will gradually accelerate from the second
quarter of 2011, supported by a recovery in demand in both the U.S. and
Asia.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]