DE: Merchandise Trade

Tue Oct 10 01:00:00 CDT 2017

Actual Previous Revised
Level E21.6B E19.5B E19.3B
Imports-M/M 1.2% 2.0% 2.0%
Imports-Y/Y 8.5% 9.4% 9.6%
Exports-M/M 3.1% 0.2% 0.3%
Exports-Y/Y 7.2% 8.0%

The seasonally adjusted merchandise trade surplus bounced back from a slightly smaller revised E19.3 billion in July to E21.6 billion in August, the most black ink since April 2016. Unadjusted, the surplus stood at E20.0 billion, up from E19.6 billion a year ago.

The widening in the adjusted surplus reflected a 3.1 percent monthly spurt in exports (to a new record high) that more than offset a 1.2 percent rise in imports. For the former, this was their seventh advance in the last eight months and their sharpest gain in a year. Imports have increased in five of the last six months. Unadjusted annual growth of exports was 7.2 percent (Eurozone 10.6 percent) after 8.0 percent in July while imports were 8.5 percent higher (Eurozone 8.5 percent) after a 9.6 percent advance last time.

The latest report puts the average July/August trade surplus at E20.5, just 1.4 percent above its mean second quarter level when total net exports subtracted 0.3 percentage points from quarterly real GDP growth.

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.