By Tetsushi Kajimoto

TOKYO Japanese exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel, as weakening external demand takes its toll on the trade-reliant economy.

Weak exports have complicated Japan's efforts to spur economic growth as sluggish domestic demand weighs on the post-pandemic recovery.

With the absence of growth drivers, some economists warn Japan could fall into a technical recession, defined as two straight quarters of contraction.

Japan's economy fell in July-September, snapping two straight quarters of expansion on soft consumption and exports, data showed on Wednesday.

Exports rose 1.6% in October from a year earlier, Ministry of Finance data showed on Thursday.

That was faster than a 1.2% increase expected by economists in a Reuters poll, but slower than the 4.3% rise in September.

By destination, exports to China, Japan's largest trading partner, fell 4.0% year-on-year in October, posting 11 straight months of declines.

Exports to the United States, Japan's key ally, rose 8.4% in the year to October, as demand for hybrid vehicles and mining and construction machinery helped drive the value of U.S.-bound shipments to its largest on record.

Imports fell 12.5% in the year to October, versus the median estimate for a 12.2% decrease.

The trade balance came to a deficit of 662.5 billion yen ($4.38 billion), versus the median estimate for a 735.7 billion yen deficit.

(Reporting by Tetsushi Kajimoto. Editing by Sam Holmes)