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Japan's Export Slump Moderates

Slump in Japan's exports moderated in June in a sign the world's third-largest economy is beginning to mend after the earthquake and tsunami.

TOKYO (AP) -- The slump in Japan's exports moderated in June in a sign the world's third-largest economy is beginning to mend after the March 11 earthquake and tsunami.

The finance ministry said Thursday that exports fell 1.6 percent from a year earlier after suffering double-digit declines in April and May. Imports rose 9.8 percent.

The trade balance returned to a surplus -- of 70.7 billion yen ($898 million) -- for the first time in three months.

Exports are a vital component of Japan's economy, which was staging a nascent recovery when the disaster struck. The earthquake and tsunami damaged or destroyed many factories in Japan's northeast that provided critical parts for manufacturers.

Mainstay sectors like autos and auto parts improved as companies worked to restore production. The value of motor vehicle exports, for example, fell 12.5 percent during the month. That compares to a 39 percent decline in May and a 67 percent plunge in April.

The Fukushima Dai-ichi nuclear power plant, which was crippled by the tsunami, has triggered worries about power shortages this summer as well. The government has ordered heavy users like factories and office buildings to cut power usage by 15 percent on weekdays until Sept. 22.

Amid concerns about the restriction's impact on the economy, the auto industry responded by shifting factory production to Saturday and Sunday, and taking off Thursday and Friday.

"Electric power restrictions are not a major constraint in practice because firms are circumventing them with measures such as weekend production," said Goldman Sachs economist Chiwoong Lee in a report. "We therefore expect export normalization to be fueled by rapid improvements on the supply side."

The International Monetary Fund says Japan's economy is set to expand later this year after contracting sharply in the first half.

"Recent data on household spending and production suggest a recovery in activity is underway, and supply chains are being restored faster than expected, limiting spillovers to other countries," it said in a report earlier this week.

It warned, however, of potential risks ahead that could derail progress, including problems restoring electricity capacity and lackluster private demand.

Exports to China, Japan's biggest trading partner, rose 1.2 percent in June, while shipments to the U.S. fell 6.1 percent. Exports to the European Union jumped 8 percent.

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