TOKYO -- Favorable exchange rates appear to be producing a hoped-for upturn in Japanese exports.

Export volume rose 3.9% on the year in December, Finance Ministry data showed Monday.

Driving this growth was a 6.4% increase in U.S.-bound shipments of passenger vehicles, the first gain in nine months. U.S. auto sales have taken a turn for the better thanks to cheaper crude oil, which has fallen by half in price since June.

Steel exports jumped 8%. A 5.5% increase in steel shipments to members of the Association of Southeast Asian Nations suggests that U.S. economic growth has helped lift sagging Asian demand for the metal. Exports of electronic components climbed 0.9%, rising for a second straight month.

The Cabinet Office's export volume index rose 2% in the October-December quarter compared with the preceding three months. By this measure, exports have grown for two straight quarters.

This apparent turnaround owes to a slow but steady increase in the number of Japanese exporters that have cut prices. The yen has weakened by slightly more than 40% against the dollar since December 2012. But even with this tailwind, manufacturers were initially reluctant to lower prices for overseas customers, fearing exchange rates would turn stormy.

Now that the weak yen has proved durable, they are letting down their guard. An index of export prices fell month on month for a forth fourth straight month in December, sliding to roughly 5% below a near-term peak reached in February 2013.

Japanese exports will stage a modest rebound in 2015, many nongovernment economists reckon. Any declines in shipments to economically depressed Europe and oil-producing nations will be more than made up for by gains in U.S.- and Asia-bound exports, says Kiichi Murashima, chief economist at Citigroup Global Markets Japan.

The weak yen is also encouraging Japanese manufacturers to increase domestic output. Nissan Motor plans to restart Kyushu-based production of cars bound for North America, raising domestic output by at least 100,000 vehicles.

But Japanese exports remain low overall. Volume grew a mere 0.6% last year owing to sluggishness in the first half. Part of the problem is structural: The yen's rapid appreciation after the 2008 global financial crisis spurred manufacturers to shift more production overseas, a trend hastened by the devastating March 2011 tsunami. Exports have recovered to only 80% of their pre-crisis level.

Stiff competition from Asian rivals is also holding back Japan's export machine. Chinese steelmakers have a production glut estimated at triple the size of Japanese output of the metal. This cheap product depresses Asian prices.

Japan's trade deficit widened to a record 12.78 trillion yen ($107 billion) last year. With cheaper oil reducing the value of Japanese imports, continued export growth could rapidly narrow this gap.

(Nikkei)