March 22, 2012 / 12:46 AM / 8 years ago

UPDATE 1-Japan export fall slows, corp mood positive

* Feb exports -2.7 pct y/y vs -6.4 pct forecast

* Trade surplus 32.9 bln yen vs 120 bln yen deficit forecast

* Manufacturers turn optimistic in March - Reuters Tankan

* Manufacturer sentiment index +2 in March, non-manuf +5

By Rie Ishiguro and Tetsushi Kajimoto

TOKYO, March 22 (Reuters) - Japan’s exports fell in February at a slower pace than the previous month, unexpectedly bringing the trade balance to its first surplus in five months in a sign that a pick-up in external demand will help the economy recover in coming months.

In a further sign of encouragement, manufacturers turned optimistic about their business conditions in March for the first time in four months thanks to improving views on the world economy and the yen’s retreat from record highs, a Reuters monthly poll showed.

Japan’s exports fell 2.7 percent in February from a year earlier, Ministry of Finance data showed on Thursday, smaller than economists’ median forecast of a 6.4 percent annual decline and following a 9.3 percent drop in the year to January.

The trade balance came to a surplus of 32.9 billion yen ($393 million), the first surplus in five months, compared with the median market estimate for a 120 billion yen deficit. The country posted its biggest ever trade deficit of 1.475 trillion yen in January.

Japan is likely to slip back into a trade deficit in coming months as it imports more fossil fuels to offset declining use of nuclear power, but improving exports and corporate sentiment could take pressure off the Bank of Japan to ease monetary policy.

“Japan’s economy should be able to recover as overseas economies stabilise and as we rebuild from the earthquake. Export competitiveness is improving, so this takes some pressure off the central bank,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Still, we’re likely to see trade deficits in the future as we have to import more energy due to the declining use of nuclear power.”

The dollar fell about 30 pips to an intraday low near 83.14 yen after the surprise trade surplus.

Imports rose 9.2 percent in February from a year earlier, against a forecast for an 8.4 percent increase.

This quarter, Japan’s economy is expected to recover from a mild contraction late last year, helped by a retreat from record high yen levels, a strengthening U.S. economy and as expectations mount for a boost from reconstruction efforts after last year’s earthquake.

Providing comfort to Japan’s export-reliant corporate sector, the yen has slumped to an 11-month low against the dollar in the wake of a surprise easing by the Bank of Japan last month.

The BOJ last month expanded its asset buying scheme by 10 trillion yen and set a 1 percent inflation goal. It stood pat this month, overruling a lone proposal for more stimulus and disappointing some in markets.

Japan logged its first annual trade deficit in 2011 in 31 years in the aftermath of the March earthquake that broke supply chains and sent fuel imports surging as nuclear power plants were idled.

January’s record trade deficit for a month came as the yen’s strength and a global slowdown hurt external demand.

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