DE: Merchandise Trade

Mon Mar 09 02:00:00 CDT 2015

Consensus Actual Previous
Level E19.5B E19.7B E21.8B
Imports-M/M -0.3% -0.8%
Imports-Y/Y -2.3% 4.0%
Exports-M/M -2.1% 3.4%
Exports-Y/Y -0.6% 10.0%

The seasonally adjusted trade surplus narrowed much as expected in January. At E19.7 billion the black ink was E2.1 billion short of its unrevised December level.

The deterioration was attributable to a sizeable 2.1 percent monthly fall in exports, their second drop in the last three months, although even this failed to reverse in full December's strong 2.8 percent rise. Compared with January 2014, total exports were down 0.6 percent with sales to other Eurozone countries 2.8 percent weaker. Imports dropped 0.3 percent from year-end, their second consecutive contraction and their third decrease in the last four months. Annual growth was minus 2.3 percent and purchases from other EMU states were down 4.5 percent.

Net exports added a useful 0.2 percentage points to quarterly real GDP growth in October-December. The January surplus was E0.4 billion below that quarter's average but will have been biased down by weaker oil prices. On current trends the first quarter could still see another positive impact.

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.