Japan's trade surplus slips back

US demand for Japanese goods has helped drive exports

Japan's trade surplus with the rest of the world fell in June, official figures show.

The surplus fell 5.9% to 807.9bn yen ($6.9bn) during the month, its first fall in two months.

The country blamed a rise in oil and metals imports for the decrease, but added that exports remained resilient.

Japan has long relied on exports to drive its economy, something that has caused particular concern among critics in the US.

However, in recent years, its trade surplus has fallen as Japanese firms have moved production overseas, while raw material costs - in particular oil - have risen.

Exports stood 14.4% higher than at the same time last year at 6.3bn yen, led by demand for vehicles, while imports rose 18.2% to 5.5bn yen.

Faster growth in China and the US - which make up more than a third of Japan's export market, have been stoking demand for Japanese cars and electronics.

Strong demand

As a result, Toyota is now the third biggest car seller in the US - raising its share of the market to 15% as while American rivals General Motors, Ford and DaimlerChrysler suffer a drop in sales.

Exports to China rose to 25.6% to 921bn yen - their second highest on record - while exports to the US grew 7.6% to 1.36 trillion yen.

But analysts have warned that future growth could be at risk if the US continues to raise interest rates.

Experts suggest ongoing rate-tightening will hit consumer spending, and so crimp demand for Japanese exports.

Longer-term trade figures for the first six months of the year showed the surplus dropped 24% to 3.4bn trillion yen as high oil prices took their toll.

However, the government is confident about its prospects and raised interest rates from 0% to 0.25% earlier this month - its first increase in almost six years.

The world's second-biggest economy had endured a decade of stagnating prices, depressing growth and limiting any rise in the standard of living.

Recently, however, domestic demand has been picking up with consumers and companies spending more - helping to push the country to its longest post-war expansion.