Published: Wednesday, 21 Oct 2009 | 9:32 PM ET

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Japan's exports edged lower for the third consecutive month in September as a rising yen weighs on overseas shipments and as a rebound driven by global stimulus spending and the stocking of inventories starts to wane.

Shipments to China continued to improve, but economists doubt this will continue as the country is trying to prevent its fiscal stimulus from forming asset bubbles in its economy.

Exports to the United States, a vital market for Japanese goods, were also slow to recover, suggesting exports will make less of a contribution to Japan's growth in coming months.

"The yen's rise is hurting corporate revenues. While the global economy is picking up, the boost to exports from strength in China may start to fade," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

"What's needed now is for consumption to recover in the United States, which is the major market for high value-added Japanese goods. In that sense, it may take time for exports to stage a full-fledged expansion."

Exports fell a seasonally adjusted 0.8 percent in September from the previous month, marking the third straight decline, the Finance Ministry said on Thursday. The ministry's seasonally adjusted figures do not exclude the effect of currency swings.

Compared with a year before, Japan's exports fell 30.7 percent in September, slightly worse than a median market forecast for a 29.9 percent decline.     

Japan's exports had been recovering for several months after a precipitous fall earlier this year, helping the Japanese economy return to growth in April-June after its deepest recession since World War Two.

Resurgent demand in Asia and emerging economies has led the recovery in Japan's exports so far. But exports to the United States have lagged improving shipments to Asia, and 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 percent in September from a year ago, slower than the 30.6 percent annual decline the previous month. Shipments to the United States fell 34.1 percent in September from a year earlier, little changed from a 34.4 percent decline in the year to August.

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, such as electronic parts makers, expect to lower their output in the future.

Based on the assumption that the effects of a recovery in manufacturing will trickle down to the rest of the economy, 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 boost from stimulus both at home and abroad fades.

The yen's recent rise is hurting many Japanese exporters, too. The yen's real trade-weighted effective exchange rate compiled by the Bank of Japan strengthened 3.1 percent in September from August.

The yen traded at 90.98 yen per dollar on Thursday, not far from an 8-1/2-month high hit earlier this month.    

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 percent in August from a record 5.7 percent the preceding month, but analysts are still not sure whether the worst is over.

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