Japan logs first trade surplus in nearly 3 years on stronger exports, cheaper oil

TOKYO (Reuters) - Japan posted its first trade surplus in nearly three years in March as exports of cars and electronics picked up, an encouraging sign that economic growth may be back on track after a sluggish start to the year.

The 8.5 per cent annual increase in exports in March matched the median estimate in a Reuters poll and was faster than a revised 2.5 per cent increase in the year to February.

Weighed down by lower oil prices, imports by value tumbled 14.5 per cent, more than the 12.8 per cent drop expected, leaving Japan with a trade surplus for the first time since June 2012.

Disappointing data on manufacturing and consumer spending have raised doubts about the strength of domestic demand, while weakness in China and Europe have clouded the export picture.

"Exports will continue to expand, and shipments to the United States will lead the way," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.

"The trade surplus is also likely to grow larger as oil prices push down imports. This is a positive for economic growth. There are a lot of good signs in this trade data."

Policymakers are keen to see exports accelerate because it is an important driver of corporate earnings, which they hope will eventually translate into higher salaries for workers and stronger consumer spending, helping the economy break out of years of deflation.

Exports to China, Japan's largest trading partner, rose 3.9 per cent on-year in March due to higher shipments of non-ferrous metals and electronics, Ministry of Finance data showed on Wednesday.

That compared with a 17.3 per cent decline in the year to February.

Exports to Asia rose an annual 6.7 per cent in March versus a revised 1.0 per cent year-on-year decline in February.

Shipments to the United States rose 21.3 per cent in the year to March, faster than a 14.3 per cent gain in the previous month as Japan sent more cars to the world's largest economy.

The 14.5 per cent import drop was the biggest decline since November 2009.

The trade balance came to a surplus of 229.3 billion yen, versus the median estimate of a 50.0 billion yen surplus.

Strong external demand is seen as key to bolstering the economy as it emerges from an unexpected recession last year.