Germany's unadjusted trade surplus soared to its highest monthly level ever in June highlighting the country's growing competitiveness on the back of a weak euro. The trade surplus reached E24.0 billion as exports posted their biggest increase on the year since August 2011. Sales abroad jumped 13.7 percent, leading to a first quarter surplus of E123.7 billion, a steep increase from last year's level of 98.7 billion.
The adjusted balance edged down from June's E22.6 billion to E22 billion. Here, exports were down 1 percent on the month and down 0.5 percent from a year ago. This was the first month since January that exports declined. Imports however surged 7.9 percent and 2.7 percent on the year. However, the monthly gain was down from May's import surge of 10.1 percent.
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.