The rebound was driven by solid demand from the United States and Europe, as well as a recovery in global semiconductor demand following the finalisation of the U.S. trade deal. Exports to the U.S. rose 8.8%, while shipments to the EU jumped nearly 20%, highlighting improving external momentum.
By sector, machinery and electrical machinery exports showed broad-based strength, with semiconductor shipments up 13%, mirroring trends across Asia’s major chip exporters. Motor vehicle exports declined overall, though shipments to the U.S. edged higher and exports to Europe remained robust. Regional demand was mixed, with exports to several Asian economies rising sharply, while shipments to China fell modestly, reflecting lingering uncertainty around bilateral tensions and weak pricing in certain commodity-linked categories.
Imports grew more slowly than exports, allowing Japan’s trade balance to swing back into surplus in November. On a seasonally adjusted basis, the trade balance has now recorded small surpluses for two consecutive months, providing a positive contribution to fourth-quarter growth.
The recovery narrative was reinforced by a sharp rise in core machinery orders, which rose 7.0% month on month in October, following a strong increase in September. Overseas demand continues to outpace domestic demand, suggesting export momentum may remain supportive in coming months, even as non-manufacturing investment lags.
Taken together, the data strengthen the case for a near-term BoJ rate hike, even as policymakers are expected to keep forward guidance neutral.
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ps. You’ll see in the attached USD/JPY chart pic the yen is having trouble holding gains despite expectations of a BoJ rate hie
