DE: Merchandise Trade

Fri Dec 09 01:00:00 CST 2016

Consensus Actual Previous Revised
Level E22.0B E20.5B E21.3B E21.1B
Imports-M/M 1.4% -0.5% -0.8%
Imports-Y/Y -2.2% -1.4% -1.6%
Exports-M/M 0.5% -0.7% -1.1%
Exports-Y/Y -4.1% 0.9% 0.6%

The seasonally adjusted trade balance was in a E20.5 billion surplus in October. This was down from a marginally smaller revised E21.1 billion in September and the least black ink since July. The unadjusted surplus was E19.3 billion versus E21.7 billion a year ago.

The headline deterioration reflected a 0.5 percent monthly rise in exports that was more than offset by a 1.4 percent increase in imports. The rebound in the former followed a 1.1 percent decline in September while the advance in the latter came after a 0.8 percent drop last time. Compared with October 2015, exports were down an unadjusted 4.1 percent while imports were off 2.2 percent.

The underlying trend in the trade surplus is probably declining slightly. It would be more falling more sharply but for a near-11 percent spike in August the black ink has shrunk in six of the last seven months. Total net exports subtracted 0.3 percentage points off quarterly real GDP growth in July-September and the early indications are that it may have a small negative impact this quarter too.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness.

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.