Japan's exports in March rose less than expected from a year earlier, suggesting that companies are starting to feel the pinch from a slowing U.S. economy.
But the data did little to alter the prevailing market view that the Bank of Japan will stand pat on monetary policy this year.
Weaker growth in exports to Europe and Asia signaled that the economic troubles in the United States may be spreading to the global economy.
"Decelerating worldwide growth is taking a toll on Japan's exports gradually, as the slowdown in the United States is having a ripple effect on the global economy," said Hiroshi Shiraishi, economist at Lehman Brothers Japan.
But some economists pointed to a mild decoupling of the United States from the rest of the world.
Japanese exports in March climbed 2.3 percent from a year earlier, slower than a median forecast for a 6.1 percent rise.
The market gave little reaction to the trade data. The yen traded at 103.02 yen to the dollar in the Asian session, compared to around 102.90 yen before the data's release.
Swap contracts on the overnight call rate are no longer pricing in any chance of a BOJ rate cut from the current 0.5 percent by the end of the year. They instead show a chance of a rate hike early next year.
But analysts said investors were going too far in shifting their focus towards rate hikes, especially with media reports saying the BOJ will downgrade its growth forecast in the central
bank's upcoming review of its policy framework.
Exports to the United States in March fell 11.0 percent from a year earlier, marking the first double-digit fall since November 2003, while exports to Asia and China increased by the smallest percentages logged since mid-2005.
Shipments of automobiles and automobile parts to the United States tumbled 11.1 percent and 19.8 percent, respectively. The 1.9 percent growth in exports to Asia marked a steep fall
from the 13.8 percent growth logged in February.
Still, some economists said the slowdown in the U.S. economy has yet to have a major impact on the global economy. They point to solid domestic demand in Asia and Europe.
"Shipments of semiconductors and other electronic devices (to China) peaked in December last year, while those of steel and automobiles remain firm. This suggests a mild decoupling of the
U.S. and Asian economies," said Takehiro Sato, economist at Morgan Stanley.
Overall, Japan's trade surplus fell 30.2 percent in March from a year earlier to 1.119 trillion yen ($10.9 billion), the Ministry of Finance data showed.
That compared with economists' median forecast for a 12.6 percent fall in the surplus to 1.4 trillion yen.
Japan's economy -- the world's second biggest -- began expanding early in 2002 and has since been in its longest postwar growth cycle thanks to exports and corporate activity.
But the government has said the economic recovery appeared to be pausing recently with rising raw material costs hurting corporate bottom lines.