TOKYO (Reuters) – Japan's exports rose more than expected in January, driven by US-bound shipments of autos and car parts and Chinese demand for chipmaking equipment, although the worsening factory sector mood added to concerns about broader economic weakness.

Ministry of Finance data out on Wednesday showed Japan's exports rose 11.9 per cent in January from the same month a year ago, faster than a 9.5pc gain expected by economists in a Reuters poll and 9.7pc growth in the previous month.

While the brisk exports could ease some concerns about further economic declines, the Reuters Tankan survey showed manufacturers' business morale soured sharply in February, with pessimists outnumbering optimists for the first time in 10 months.

Some analysts cautioned against reading too much into the firm export data, noting the 29.2pc year-on-year increase in China-bound shipments was partly skewed by comparisons with 2023, with the quieter Lunar New Year period falling in January last year.

Meanwhile, a weaker yen has likely played a bigger role in lifting the value of exports, rather than stronger demand.

"The US economy is slowing down and Europe is in recession, so there's no reason to become optimistic about Japanese exports which are weakening as a trend," said Takeshi Minami, chief economist at Norinchukin Research Institute.

The batch of indicators followed data last week that showed Japan unexpectedly tipping into recession in the fourth quarter and losing its spot as the world's third-largest economy to Germany.

Speculation has grown since last year that the Bank of Japan may exit its negative interest rates policy as early as March or April, if wage and price growth picks up enough.

However, recent weak data has stoked worries Japanese firms may become reluctant to boost wages enough to achieve stable and sustainable inflation in a country that has been mired in a deflationary mindset for more than a decade.

The Reuters Tankan indexes found that manufacturers' sentiment tumbled to minus 1 in February from the prior month's plus 6, the first negative reading since last April. The index is seen rebounding to plus 6 in May.

The trade data also showed imports fell 9.6pc, versus the median estimate for a 8.4pc decrease.

The trade balance came to a deficit of 1.758 trillion yen ($11.73 billion), versus the median estimate for a deficit of 1.926 trillion yen.