Japan’s current-account surplus was the smallest for the month of May since at least 1985 and machinery orders fell the most in more than a decade.
The excess in the widest measure of trade shrank 63 percent from a year earlier to ￥215.1 billion (US$2.7 billion), the Japanese Ministry of Finance said in Tokyo yesterday. The median estimate of 24 economists surveyed by Bloomberg News was for a surplus of ￥493.1 billion. 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 2001.
Orders from chemical makers and aerospace manufacturers were among sectors that led the decline, according to the report.
Japan’s trade position has weakened because of growing energy imports after last year’s earthquake and nuclear meltdown and also the yen’s gain of 4.9 percent against the US dollar since mid-March.
“Today’s machinery order drop is very large, and it may be a signal that Japanese companies are becoming cautious about investment” amid concern about a global economic slowdown, Tokyo-based Sumitomo Mitsui Asset Management senior economist Hiroaki Muto said.
“Though exports have been slumping, we don’t expect Japan to have any major trade deficit, he added.”
Japan posted a ￥4.4 trillion trade deficit in the fiscal year that ended on 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 that probably cooled to 2 percent in the second quarter and about 1.5 percent in the last six months of this year, according to a Bloomberg survey of economists.
The Bank of Japan raised its economic evaluation for all regions for the first time in more than two years, citing improvements in consumer spending and rebuilding demand, it said in a report released last week.