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Japan's export growth quickened more than economists estimated in April as shipments to Asia and emerging markets helped the nation weather the U.S. slowdown.

Exports, the driver of more than half of last quarter's expansion, rose 4 percent from a year earlier after climbing 2.3 percent in March, the Finance Ministry said today in Tokyo. The median estimate of 17 economists surveyed by Bloomberg News was for a 2.5 percent increase.

Shipments to the U.S. fell for an eighth month, extending the worst streak since 2004, as the yen gained and the housing recession stifled demand for cars and electronics in Japan's biggest market. Growth in China and a commodities boom in Russia and the Middle East have helped exporters including Matsushita Electric Industrial Co. and Komatsu Inc. resist the U.S. slump.

“There's a new global growth dynamic,'' Huw McKay, senior international economist at Westpac Banking Corp. in Sydney, said on Bloomberg Television. “Japanese manufacturers are so diversified, they're in as good a position as any to take advantage of that.''

The yen traded at 102.84 per dollar at 12:24 p.m. in Tokyo from 103.07 before the report was published. The yield on Japan's 10-year bond rose 5 basis points to 1.655 percent.

Imports climbed 11.9 percent from a year earlier as oil prices surged to a record, narrowing the trade surplus by 46.3 percent to 485 billion yen ($4.7 billion), the ministry said. Economists expected a surplus of 739 billion yen.

U.S., China

Shipments to the U.S. fell 9.1 percent in April from a year earlier. Export growth to China accelerated to 14.1 percent last month from 3.1 percent in March. Shipments to Asia, where Japan ships about half its exports, rose 7.2 percent after gaining 1.8 percent a month earlier. Those to Europe climbed 1.3 percent.

“While exports to the U.S. will keep slumping because the country's economy is almost in a recession, exports to Asia and emerging countries will remain solid,'' said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo. “With oil prices soaring, exports to the Middle East and Russia will remain strong.''

Fumio Ohtsubo, president of Matsushita Electric, last month said demand for Panasonic televisions in the Middle East and Russia will help profit climb 10 percent to a record in the year ending March 31.

Komatsu, Japan's largest maker of earthmovers, last month forecast a fifth year of record earnings, helped by sales of construction and mining equipment in China and resource-rich countries.

Profit Squeeze

Exports to emerging markets helped Japan's growth accelerate to an annual 3.3 percent pace last quarter.

Still, costlier raw materials and a stronger yen are squeezing profits even as exports grow. Crude oil has doubled in the past year and soared to a record $135.04 a barrel today. Japan imports virtually all of its oil.

“The main problem for Japan isn't the U.S., it's the terms of trade,'' said Westpac's McKay. “Margins are under serious threat.''

Chief Cabinet Secretary Nobutaka Machimura said today that rising oil prices are giving a “big shock'' to the world's second-largest economy. Bank of Japan Governor Masaaki Shirakawa said this week that costlier energy and raw materials may cause companies and consumers to pare spending, slowing the economy's longest postwar expansion.

Toyota Motor Corp., the nation's biggest automaker, expects falling U.S. sales, higher commodity prices and the stronger yen to erode earnings. Sony Corp. last week said profit at its electronics division will fall this year because of the currency's gains.

Stronger Yen

The yen traded 14 percent higher against the dollar in April from the same month a year earlier, eroding the value of exports when repatriated and making Japan's goods less competitive abroad. About half of the nation's shipments overseas are settled in dollars.

The U.S. slowdown is beginning to take its a toll on Asia. Shipments of semiconductors and electrical parts to China fell for a sixth month, today's report showed.

“This shows the spillover from the U.S.,'' said Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo. “Those parts are used in products that are assembled in China and then exported to the U.S.''

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