Japan's real exports grew in September thanks to robust demand from Asia, while the country's trade surplus climbed to its highest level since the global crisis.
Although the pace of recovery in exports is likely to slow in coming months, economists expect exports to stay on a recovery track, boding well for Japan's economy, which relies heavily on overseas markets for its goods.
Nominal exports fell slightly on the yen's rise, however, and analysts say more strengthening in the currency could hurt manufacturers who are still smarting from a sharp slide in demand worldwide.
Real exports rose 5.4 per cent from the previous month in September, Bank of Japan figures showed.
Exports fell a seasonally adjusted 0.8 per cent in September from the previous month, marking the third straight decline, the Finance Ministry said today. The ministry's seasonally adjusted figures do not exclude the effect of currency swings.
Compared with a year ago, Japan's exports fell 30.7 per cent in September, slightly worse than a median market forecast for a 29.9 per cent decline.
Exports have been recovering for several months after a precipitous fall earlier this year, helping Japan rebound in April-June from its deepest recession since World War Two.
Reviving demand in Asia and emerging economies has led the recovery in Japan's exports so far, and this trend became clearer in September, benefiting shipments of Japanese-made automobiles, steel and electronic parts such as semiconductors, according to an official of the Ministry of Finance.
Overall exports, as a result, hit the highest this year and were up 46 per cent from the start of the year, while the degree of year-to-year fall narrowed to the smallest so far this year.
But some economists fret that there won't be enough demand from the United States to pick up the slack as the impact of stimulus spending around Asia fades.
Exports to Asia, which account for more than a half of Japan's total exports, fell 22.2 per cent in September from a year ago, while those to the United States fell 34.1 per cent.
An export recovery has been a catalyst for the rebound in Japan's industrial production during the past several months, but gains slowed in August and many firms that count on overseas demand expect to cut output in the future.
The Bank of Japan upgraded its economic assessment for the second month in a row in October, saying the economy has started to recover, but many analysts say the recovery may slow down early next year as the effect of stimulus spending fades.
The yen's recent rise is hurting Japanese exporters, too. The yen's real trade-weighted effective exchange rate compiled by the Bank of Japan strengthened 3.1 per cent in September from August.
The economy is likely to be overshadowed by soft domestic consumption after many manufacturers slashed jobs to cope with unprecedented declines in their global sales.
Japan's jobless rate unexpectedly dropped to 5.5 per cent in August from a record 5.7 per cent the preceding month, but analysts are still not sure whether the worst is over.
Reuters