Japan exports grow more than expected in March

Investing.com-- Japan’s exports grew more than expected in March, continuing strong growth momentum from the prior month and pushing the country into a trade surplus as demand in its biggest markets- the U.S. and China- remained strong.

Exports grew 7.3% year-on-year in March, official data showed on Wednesday. The reading was higher than expectations of 7.0% and remained close to the 7.8% jump seen in the prior month. 

Strong exports saw Japan’s trade balance swing to a surplus of 366.5 billion yen ($2.37 billion), beating expectations for a surplus of 345.5 billion yen and rising from the 377.8 billion yen deficit seen in the prior month. 

Continued stimulus measures in China helped spur some improvements in local demand, while recent inflation and retail figures showed that consumption in the U.S. remained strong. 

A weak yen also factored into increased demand for Japanese goods, as the USDJPY pair rose to its highest level since 1990. 

The swing to a trade surplus was also in part driven by a slide in Japanese imports, which fell 4.9% in March. While the drop was slightly lower than expectations for a fall of 5.1%, it still marked a sharp reversal from the 0.5% rise seen last month. 

Japanese demand was seen somewhat cooling amid sticky inflation and languid wage growth in recent months. But this trend is expected to change, especially as major Japanese labor unions won bumper wage hikes for 2024.