The seasonally adjusted trade balance was in a slightly larger than expected E22.8 billion surplus in May, up from a marginally smaller revised E21.5 billion excess in April. The unadjusted black ink stood at E19.5 billion, down from 21.2 billion at the start of the quarter.
The modest improvement in the adjusted surplus was attributable to stronger exports which rose 1.7 percent on the month, their best performance since last December, to a new record high. This comfortably offset a 0.4 percent gain in imports that only reversed part of April's 0.8 percent decline. Exports have now expanded for four consecutive months and stand 4.6 percent higher on the year. Annual import growth was 3.0 percent.
The buoyancy of the May figures means that the average surplus for the first two months of the second quarter was 12.1 percent larger than its first quarter mean when it shrank 2 percent. This suggests that, having hit growth hard in the first quarter, net exports probably provided at least a small boost in the period just ended. This may be good news for the German economy but other Eurozone governments are unlikely to be impressed.
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.