×

Japan October exports rise at fastest pace in 8 months

Japan's exports rose at their fastest pace in eight months in October, an encouraging sign that global demand is picking up.

Exports rose 9.6 percent on an annual basis, data from the Ministry of Finance showed Thursday, above the 4.5 percent rise forecast from Reuters, and following a 6.9 percent rise in September.

Imports, meanwhile, rose 2.7 percent from the year-ago period, below expectations of a 3.4 percent rise and after rising 6.2 percent in September.

Read MoreNew repair manual needed for Japan's broken economy

This brought the trade deficit to 710 billion yen, better than expectations for a 1.05 trillion yen deficit and narrower than September's 958.3 billion deficit.

"Japan is basically exporting out of crisis again. We already had very strong figures in September and this is becoming a trend," said Martin Schulz, senior economist at Fujitsu Research Institute.

"The main reason is because exporters are finally realizing that the yen will stay weak for a longer time and they are now looking for longer-term demand, particularly in Asia. [They are] expanding their markets and exports there and that obviously helps the economy tremendously," he said.

Read MoreJapan shocks as economy slips into recession

Exports to Asia, which account for more than half of Japanese shipments, rose 10.5 percent, boosted by shipments of metals and auto parts to China and computers to Asia overall, data showed.

The outlook for Japanese exports has been in focus after momentum faltered in recent months despite a weak yen, which traditionally makes it more attractive for overseas firms to buy goods from Japan.

169041453BW003_JAPAN_SHOWS_
Getty Images

Underperforming exports have been one of the weak links in the Japanese economy, which is struggling to cope with a the effects of sales tax hike to 8 percent from 5 percent in April.

Japan's economy shrank an annualized 1.6 percent in the third quarter, tipping into a technical recession after contracting 7.3 percent in the second quarter. The results led Prime Minister Shinzo Abe delay a second sales tax hike scheduled for October 2015 by 18 months and call for a snap election in December. Meanwhile, the Bank of Japan expanded its stimulus program at the end of October to support the economy's fragile recovery.

Uncertainty over the effectiveness of Abenomics and signs of slowing global growth have amplified concerns that exports may struggle to accelerate further, but Schulz is optimistic.

Read MoreJapan PM calls snap election, delays sales tax hike

"This [positive export performance] will continue into next year. While the Japanese market will remain slow, exporters will focus on overseas markets... and it will help tremendously," he said. "We already have this in the last disappointing [gross domestic product] data; most of the growth came from exports [but] it was dampened a little bit by higher import prices."