German Trade Surplus Shrinks

Macroeconomic data showed that Germany’s seasonally adjusted factory orders unexpectedly eased 0.9% on a monthly basis in July, weighed down by US President Donald Trump’s protectionist policies and defying market expectations for a gain of 1.8%. In the previous month, factory orders had declined by a revised 3.9%.

Germany’s trade surplus narrowed in July to its smallest level in more than four years, as exports slipped while imports jumped, Action Forex reported.

The data from the federal statistics office, Destatis, which showed the foreign trade balance dropped by €3.2 billion ($3.72 billion) to a €15.8 billion surplus in calendar and seasonally-adjusted terms, is the latest indication of weakness in the export-driven economy of the eurozone’s powerhouse. Germany has not run a smaller surplus since March 2014.

Economists had expected exports to recover in July following a flat June, according to a poll by Thomson Reuters, but instead they fell 0.9% month-on-month. Imports meanwhile filled the gap, increasing by a much-larger than expected 2.8%. Analysts had only anticipated imports to edge higher after they had already risen by more than 1% in June.

The jump in imports amid falling exports points to weakening overseas demand for German goods while domestic demand for foreign products remains resilient.

Industrial output data, also published by Destatis on Friday, added further weight to the darkening picture of the German economy.

Although recent leading indicators such as order data have been weak, analysts were still expecting a 0.2% month-on-month rise in output, according to a Reuters poll, amid hopes the German economy would emerge quickly from its first-half funk during the third quarter.

But instead output dropped by 1.1% in July, although the previous month’s decline of 0.7% was slightly less severe than initially thought, giving little sign of an imminent turn round.