DE: Merchandise Trade

Fri May 08 01:00:00 CDT 2015

Consensus Actual Previous Revised
Level E20.0B E19.3B E19.7B E20.0B
Imports-M/M 2.4% 1.8%
Imports-Y/Y 7.1% 0.8%
Exports-M/M 1.2% 1.5%
Exports-Y/Y 12.4% 3.9%

The seasonally adjusted merchandise trade balance remained firmly in the black in March. A E19.3 billion surplus was only E0.7 billion short of February's upwardly revised level and some E4.0 billion above its mark a year ago. Unadjusted the excess stood at an even larger E23.0 billion, an 18 percent increase versus its mid-quarter mark.

The minor reduction in the headline surplus reflected a 2.4 percent monthly increase in imports, their strongest rise since last September. Exports were up a more modest 1.2 percent, a slight weakening from February's 1.5 percent pace. Compared with March 2014 exports expanded 12.4 percent and imports a much smaller 7.1 percent but both sides of the balance sheet registered new record highs.

The unrelenting strength of the German external accounts will not sit well with many other EMU countries still looking for rising German domestic demand to give a boost to their own export industries. Indeed, German exports to the rest of the Eurozone grew 9.1 percent on the year or nearly double the pace of their imports (4.9 percent). Pressure on the German government to do more to underpin the Eurozone economic recovery can only become more intense.

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.