Japan current account surplus rises in May

TOKYO, July 8 (Reuters): Japan's current account logged a higher-than-expected surplus in May, government data showed on Tuesday, as the trade deficit narrowed due to a decline in imports.

But the improvement in the current account surplus could be temporary as export growth slowed in May, a sign that firms shifting manufacturing capacity overseas has made it difficult for exports to grow rapidly.  

The current account data also highlighted the need to stimulate domestic demand and the services sector as exports are no longer enough to drive economic growth.

The surplus was 522.8 billion yen ($5.14 billion), more than the median forecast for a 403.6 billion yen surplus. It was the fourth consecutive month of surpluses, the finance ministry said.

In April, the surplus was 187.4 billion yen.

Exports rose 2.0 per cent in May from a year ago, slower than a 6.2 per cent annual gain in April.

Imports fell an annual 0.4 per cent, following a 6.6 per cent annual increase in April. As a result, the trade deficit in May narrowed to 675.9 billion yen.