The seasonally adjusted merchandise trade surplus narrowed from a smaller revised E22.4 billion in July to E19.6 billion in August, its weakest reading since March. The unadjusted balance was E15.3 billion, down sharply from E25.0 billion last time.
August's headline deterioration reflected relatively sharp contractions in both sides of the balance sheet as exports fell 5.2 percent on the month and imports declined 3.1 percent. For the former the fall was the second in three months and sharpest since January 2009 and left exports at their lowest level since January. Imports saw a third decrease in five months and their weakest level in six.
Compared with August 2014 exports were up 6.6 percent, mainly thanks to an 8.1 percent gain in non-EMU EU demand while imports were 3.5 percent higher.
Today's data put the average July/August surplus 4.7 percent below its mean level in the second quarter when it expanded 11.5 percent versus January-March. In line with other recent indicators this warns that third quarter real GDP growth might surprise on the downside. More generally, the weakness of exports will add to worries about the slowdown in global economic activity.
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.