Japan's July trade surplus quadruples

       Japan's trade surplus soared for a second straight month as the world's second largest economy limps out of its worst recession in decades, official data showed yesterday.
       Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump triggered by a collapse in overseas demand for Japanese cars, electronics and other goods.
       The trade surplus jumped more than four-fold to 380.2 billion yen ($4.0 billion)in July, from 81.9 billion yen a year earlier,the finance ministry reported.
       The figure was slightly smaller than the 390 billion yen surplus the market had expected.
       Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
       Japan's exports fell 36.5% year-onyear to 4.84 trillion yen in July while imports sank 40.8% to 4.46 trillion yen.
       The fall in exports by value was sharper than the drop of 35.7% in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
       China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods,he said.
       "Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
       Export volumes fell 27.6% in July from a year earlier, compared with drops of more than 40% in February and March,the data showed.
       "Exports are likely to continue rising,given the favourable outlook for the US and China - Japan's key export destinations," predicted Barclays Capital economist Kyohei Morita.
       One worry, however, is that the end of the US government's popular "Cashfor-Clunkers" programme to boost auto sales this month could weigh on exports.
       Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor Corp plans to slash its global production capacity by 10% to cope with weak sales.
       Against that backdrop,"exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise," said RBS Securities economist Junko Nishioka.
       Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
       But data released last week showed the economy expanded by 0.9% in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
       Japan's trade surplus with the United States shrank by 44.5% in July from a year earlier to 333.0 billion yen while that with the European Union fell 72.1%to 104.0 billion yen, the finance ministry said. The trade deficit with China narrowed by 27.2% to 54.0 billion yen.