Japan Exports Soar Past January Estimates

Exports rose by an impressive 17 percent on year last month, the biggest jump since late 2013, beating expectations for an 11.9 percent rise forecast in a Reuters poll. 

In contrast, imports for the month fell nine percent from a year earlier, which was a bigger-than-expected drop compared with a Reuters poll forecast for a 4.8 percent drop, reflecting the multi-year low oil of prices. 

Moreover, export growth was significant across all geographies; shipments to Asia, the US and Europe rose by 22.7 percent, 16.5 percent and 7.4 percent respectively. 

The export sector has emerged as a key driver of Japan's recovery, helping the economy crawl out of a recession in the fourth quarter. The economy grew a total of 2.2 percent in the three months leading up to December 2014.

“This is a positive result for Japanese economy. Exports will continue to support economic growth in 2015, although private investment has also started to pick up and will have an important contribution to the economy,” said Tomo Kinoshita, chief Japan economist at Nomura. 

Kinoshita, however, warned that February's export data may not match January's strength due to the Lunar New Year holiday being celebrated in China. For this time period, factories begin to shut down, resulting in a slowdown in demand for overseas goods. Japan's main exports to China include machinery, electronics and materials such as steel and chemicals. 

Nevertheless, with overseas demand picking up and the yen weak, exports will continue to be a relative bright spot this year. 

“Yen depreciation has really made Japanese products more competitive, particularly within Asia, where exports are often transacted in yen,” Kinoshita added.