September's seasonally adjusted merchandise trade surplus was E19.4 billion, only slightly smaller than expected and little changed from its unrevised August print. However, it was also the smallest since November 2014. Unadjusted the surplus was E22.9 billion, yielding a cumulative E186.7 billion of black ink during the first nine months of 2015 versus E156.3 billion over the same period last year.
The minor reduction in the headline reflected a 3.9 percent monthly jump in imports that more than offset an otherwise very respectable 2.6 percent increase in exports. That said, the bounce in the latter, which constituted their best performance since December 2014, recovered just half of their record mid-quarter slump and exports in the third quarter were 0.6 percent below their second quarter level. Unadjusted annual export growth slowed to 4.4 percent while imports were 3.9 percent higher on the year, a slight improvement on their August outturn.
Net exports were instrumental to second quarter growth, providing fully 0.7 percentage points of the 0.4 percent quarterly change in total output. However, with the July-September trade balance more than 6 percent short of its April-June reading, any boost be will nothing like as sizeable last quarter (flash GDP report due Friday).
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.