Japan’s trade surplus shrank by a bigger than expected 24.8% in October from a year earlier on higher raw material costs and aircraft imports, the government said. The surplus declined to ¥614.70bn ($5.21bn), the first fall for three months, the finance ministry said.

The figure was well below market expectations for a surplus of about ¥780.6bn, after September’s 18-month high of ¥1.01 trillion.

The fall was largely due to imports of three aircraft from the United States and purchases of liquefied natural gas to activate thermal power plants due to the suspension of nuclear power plants, a ministry official said. Exports gained 11.6% from a year earlier to about ¥6.59 trillion, while imports climbed 17.4% to around ¥5.98 trillion.

Analysts said the uptrend in exports remained intact and cooling energy costs should help to rein in imports in future.

“Imports, as a whole, are expected to see a slowdown in the year-on-year growth pace in line with the recent steady decline of crude oil prices,” Informa Global Markets economist Kenji Arata said.

So Japan’s trade surplus was unlikely to see such a sharp contraction again in the near term, Arata said. “The relatively large decline in the trade surplus, because it was a result of one-off factors, would not block the Bank of Japan from hiking interest rates sometime in the first quarter of next year,” he added.

Imports from other Asian nations climbed 20% on demand for items such as clothing, semiconductor chips and liquefied natural gas, the ministry said.

The trade deficit with China widened 23.7% to ¥272.3bn, as imports rose 19.5% to about ¥1.26 trillion with iron and steel import costs up 92.3%. Exports to the United States climbed 13.5% as automobile shipments rose 36.3%, while imports gained 21.8%.

“The solidity of exports, especially shipments to the US, up to the end of October seems to suggest that exports are likely to continue to offer an important substitute for sluggish domestic demand in the final quarter of ’06,” Daiwa Institute of Research senior economist Junichi Makino said.

“It is evident that stronger-than-expected vehicle exports have been supporting exports overall in recent months. We need to be alert to the future trend of sales of Japanese autos in the US,” Makino added.

The deficit with the oil-rich Middle East, which provides much of Japan’s energy supplies, swelled by 5.7% to ¥830.80bn.

“It seems that the slower growth in exports to the EU is due to the start of the local (European) assembly of autos by some Japanese automakers,” Mitsubishi UFJ Securities senior economist Osamu Katano said. Exports to the EU increased 8.7%, after a 14.1% rise in September this year.