Japanese trade out of the red

A RARE beam of light shone through Japan's economic gloom in January when the country's year-on-year trade balance moved back into the black. Firm demand for Japanese cars in the US helped to generate a surplus of 188.1bn yen (£1bn) during the month, compared with a 95.7bn yen deficit in January last year. Car exports rose 25% in value, and total sales of all products to the US rose 15% to 524.8bn yen.

Continuing slow demand in other regions left total exports down 1.8%, while the value of imports plunged by

9.4%.

The surplus surprised economists in Tokyo, who had expected the long-term downward trend in trade figures to continue. Last year Japan's trade surplus shrank by 38%, the biggest fall since 1970 and the third consecutive year of contraction. Seasonally-adjusted figures looked even more favourable, with imports up 4%, and exports 8.5% higher.

The surplus is expected to continue to grow as a recovering US economy boosts demand for motor vehicles, consumer goods and electronics components and Japan's sinking consumption holds back imports.

The fall in the value of the yen, which has lost 14% against the dollar in the past 12 months, also helped to revive exports.

This was the first increase in five months, but while the growth is good for some Japanese companies it is anticipated that a growing surplus will regenerate political concerns over the massive trade imbalance between the US and Japan.