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Japan's December exports grew faster than expected

Supply bottlenecks ease but chip shortage remains for automakers

Japan's December imports by value surged 41.1% on higher raw material costs and a weak yen. (Photo by Tomoki Mera)

TOKYO (Reuters) -- Japan's exports rose faster than expected in December to mark the 10th straight month of year-on-year growth, data showed on Thursday, as supply bottlenecks continued to ease toward the end of 2021.

However, a persistent semiconductor shortage remains a headache for Japanese firms such as car maker Toyota, which on Tuesday slashed its near-term output target, in addition to uncertainties around the Omicron coronavirus variant.

Exports increased 17.5% in December from a year earlier, Ministry of Finance data showed, compared with a 16.0% gain expected by economists in a Reuters poll and following a 20.5% increase in the previous month.

Shipments to China, Japan's biggest trade partner, grew 10.8% in December from a year earlier.

Yen-denominated exports and imports hit records in December since comparable data became available in 1979.

Imports by value surged 41.1% on higher raw material costs and a weak yen, compared with expectations of a rise of 42.8% and growth of 43.8% in November.

The led to a trade deficit of 582.4 billion yen ($5.09 billion) in December, compared with expectations for a gap of 784.1 billion yen. November's trade deficit totalled 955.6 billion yen.

Japan's economy is expected to have grown by an annualised 6.5% in the last quarter of 2021 thanks to a strong rebound in domestic consumption, according to the latest Reuters poll.

But policymakers have been wary of risks from the rapidly spreading Omicron variant, as Japan recorded its largest daily COVID-19 infections on Tuesday.

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