DE: Merchandise Trade

Mon Feb 09 01:00:00 CST 2015

Actual Previous Revised
Level E21.8B E17.7B E17.9B
Imports-M/M -0.8% 1.5%
Imports-Y/Y 4.0% 1.7%
Exports-M/M 3.4% -2.1%
Exports-Y/Y 10.0% 1.4%

The seasonally adjusted trade surplus widened out from a slightly larger revised E17.9 billion in November to E21.8 billion in December. The year-end improvement put the black ink for the full calendar year at E217.0 billion, up 11.1 percent from the 2013 outturn and a new record high.

December was a good period for exports which more than reversed November's 2.2 percent drop with a 3.4 percent monthly rise and now stand 10.0 percent above their year ago level. By contrast, imports fell 0.8 percent versus mid-quarter, their second decline in three months, and were only 4.0 percent stronger than in December 2013.

The fourth quarter surplus was E60.6 billion, up 4.8 percent from its third quarter reading and possibly indicative of a small positive contribution from net exports to real GDP growth. The slide in the euro and weakness of oil prices should together provide a sizeable boost to the German trade surplus over coming months. However, whether or not this translates into a larger German contribution to economic activity elsewhere in the Eurozone remains to be seen. German exports to the region's other member states increased 2.7 percent in 2014 versus just a 2.0 percent rise in imports from the same countries. This will not sit well with many EMU governments who see German fiscal policy as far too tight.

Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. In Germany the goods balance is the main focus as this dominates developments in the overall current account balance. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in Germany. Exports show the demand for German goods in countries overseas. Given the size of the German economy, the euro can be sensitive to changes in the trade balance. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.