Japan trade deficit narrows on export pick-up

A rebound in exports helped narrow Japan's trade deficit in July, data showed Wednesday, but the shortfall still came in worse than expected after a marked slowdown in the world's number three economy.

The pick-up in shipments abroad offered some good news after figures last week showed the economy suffered its biggest quarterly contraction since the 2011 quake-tsunami disaster as an April sales tax rise slammed the brakes on growth.

The latest trade figures will likely be a relief for Japanese authorities amid concerns that the yen's plunge since late 2012 has not translated into a big jump in export growth as domestic firms shift production overseas.

Japan's exports in July rose 3.9 percent on-year to 6.19 trillion yen, the first rise in three months, thanks to robust shipments of automobiles and electronic equipment such as parts for smartphones.

Imports rose 2.3 percent to 7.15 trillion yen, underpinned by purchases of oil and gas, which have shot up in the wake of the 2011 Fukushima nuclear crisis, when Japan shuttered its nuclear reactors.

Overall, the trade deficit last month came in at 964.0 billion yen ($9.4 billion), narrowing from 1.03 trillion yen a year ago, although it was wider than the June trade deficit.

"July's trade deficit was larger than expected, and indicates that net trade is unlikely to provide much support to GDP growth in the third quarter," Capital Economics said in a note.

"However, the recent improvement in external demand suggests that the shortfall will narrow further towards year-end."