-Koya Miyamae, senior economist at Nikko SMBC Securities
Japan recorded its sixth consecutive monthly surplus in the broadest measure of trade in December. Nevertheless, the surplus shrank for a fourth straight year to the smallest on record in 2014. The gap in trade rose to an adjusted 976.6 billion yen in December from 914.5 billion yen in the preceding month, helped by income from overseas investments and a narrowing trade gap due to a weak Japanese Yen and falling oil prices, according to the Ministry of Finance. Analysts, however, had estimated a surplus of 940.8 billion yen in December. The surplus in the current account stood at 187.2 billion yen in December before seasonal adjustment. Exports jumped 19% from a year earlier, while imports soared 6.7%, leaving a trade deficit of 395.6 billion yen in December.
The local currency has lost 29% versus the US Dollar since Prime Minister Shinzo Abe came to power in December 2012 with a pledge to restore the world's third-biggest economy implementing reflationary Abenomics policies. Yet, Japan's consumers feel pessimistic about economic conditions in the country. The consumer confidence index compiled by the Cabinet Office ticked up to 39.1 in January from 38.8 in the preceding month. Readings below 50 indicate that households believe that economic conditions are deteriorating. The biggest drag on consumer confidence came from the sales tax hike in April 2014, when the levy rose from 5% to 8%.
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