TOKYO — Japan's politically embarrassing trade surplus dropped 31% to $5.15 billion last month from August, 1986, reflecting a rise in the nation's appetite for foreign goods, the government announced Thursday.
Japan's trade surplus has eased month by month since the end of last year, but the latest decline from $7.48 billion a year ago is the most dramatic.
Economists said the report should reduce some of the friction between Japan and the United States, which is mulling protectionist trade legislation.
Japan's surplus with the United States shrank in August to $3.73 billion from $4.41 billion in the same month last year.
The decline, a 15.3% drop from last year, marks the first double-digit percentage fall in more than two years.
Government officials said that the declining bilateral surplus was due to fewer Japanese auto sales in the United States and rising purchases of American lumber and aircraft.
The report, which indicates some redressing of the trade imbalance between the United States and Japan, lifted the dollar and touched off a rally on Wall Street.
The Dow Jones index of 30 industrials soared 26.78 to 2576.05, its strongest showing in two weeks.
Japan's overall trade surplus had exceeded $6 billion each month for the past 1 1/2 years, except for January, which is atypical because of the long New Year holidays.
The accelerating decline in Japan's surplus is due in part to the stronger yen.
But Finance Ministry officials were quick to note the strong 32.9% growth in imports to $12.43 billion, the sharpest rise since July, 1980.
Much of the increase, however, was due to higher oil prices that inflated the value of Japan's imports, they said.
Japan's exports last month grew at a slow 4.4% rate to $17.58 billion.
The financial markets are now waiting for the United States to release its July trade figures today. Analysts have been expecting a deficit of between $14.5 billion and $18 billion.
Anticipation of another huge U.S. shortfall had undermined the dollar, but the gloomy outlook was somewhat dispelled by Japan's trade report. At the end of the trading day in New York, the dollar rose to 142.42 yen from 141.82 late Wednesday.