The seasonally adjusted trade balance was in a E20.8 billion surplus in October, up from a slightly smaller revised E19.2 billion in September. The unadjusted print was E22.5 billion, little changed from September's E22.8 billion outturn.
The widening in the adjusted black ink masked some shrinkage in both sides of the balance sheet. Exports were down 1.2 percent on the month following a 2.6 percent increase in September and, at E99.0 billion, saw their second weakest mark since March. Decelerating global growth is taking its toll. Unadjusted annual export growth was 3.3 percent. Meantime, imports declined a much steeper 3.4 percent from September, their third decrease in the last five months and, at E78.3 billion, their second lowest reading since February. The yearly rise in imports slipped to 3.0 percent.
The October surplus was 1.6 percent above its average level in the third quarter when net exports subtracted fully 0.4 percentage points from the change in real GDP. This suggests that the overseas contribution should be much less negative this quarter. Amidst signs of some slowdown in domestic demand, this will probably be needed if economic growth is to match, let alone exceed, the sluggish 0.3 percent quarterly rate posted in July-September.
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.