Japan extended a string of trade deficits in May, official data showed Wednesday, as the country's import costs rose on the weak yen but shipments to the United States and China soared.
The strong export data -- up 10.1 percent over last year -- comes after earlier figures showed the world's third-largest economy grew faster than expected in the first quarter, as Prime Minister Shinzo Abe works to stoke growth.
The yen's sharp drop since late last year makes Japanese exporters more competitive overseas and inflates the value of their repatriated overseas earnings.
The trade data is a key signal for economists who have been trying to pin down whether "Abenomics" -- a program of big government spending and aggressive monetary easing -- is rippling through the economy.
"This (export data) shows Japanese companies are increasingly in better shape" Junko Nishioka, chief economist at RBS Securities Japan, told Dow Jones Newswires.
"Their profitability is also rising these days, meaning they are becoming more resilient to potential external shocks."
The finance ministry data Wednesday showed Japan's trade deficit expanded 9.5 percent from a year earlier to 993.9 billion yen ($10.4 billion), the eleventh consecutive shortfall and the longest string of monthly deficits in three decades.
But May's deficit was smaller than expected as the market had forecast a shortfall of around 1.2 trillion yen.
Exports rose 10.1 percent to 5.76 trillion yen, growing for the third straight month on higher shipments to the United States and China. Exports to recession-hit Europe remained weak, falling 4.9 percent.
Imports meanwhile also climbed 10.0 percent, the seventh consecutive month of increases, as costs of fuel and other items jumped due to the weaker yen.
The jury is still out on Japan's economy-boosting plan although export volumes are moving in the right direction, said Masahiko Hashimoto, economist at Daiwa Institute of Research.
"Export volumes, which we should look at for a link with the economy, were lower than the year-before level but the margin of decline is shrinking... that is a good sign."
A return to trade surplus, however, could be some way off, he added.
"It will be quite difficult to return to surplus," Hashimoto said. "Import volumes will stay high due to fuel demand. That situation would not change drastically unless nuclear power plants resume operations."
Japan's fuel imports have soared as most of its atomic reactors remain off-line since the huge earthquake and tsunami in 2011 sparked the world's worst nuclear accident in a generation.
The disaster knocked Japan's already lumbering economy, which Abe pledged to kickstart as he swept December elections.
In April, new leadership at the Bank of Japan -- handpicked by Abe -- vowed to hit a two-percent inflation target within two years, jack up asset purchases including government bonds, and double money supply.
The ambitious target, a key part of Abe's bid to revive the economy, is aimed at reversing years of falling prices that have crimped private spending and business investment.
Last week, the BoJ said the economy was "picking up" as it held off ramping up April's huge stimulus scheme, part of a wider plan that includes structural reforms to the economy.