DE: Merchandise Trade

Thu Nov 09 01:00:00 CST 2017

Actual Previous Revised
Level E21.8B E21.6B E21.3B
Imports-M/M -1.0% 1.2% 0.8%
Imports-Y/Y 5.5% 8.5% 8.2%
Exports-M/M -0.4% 3.1% 2.0%
Exports-Y/Y 4.6% 7.2% 7.3%

The seasonally adjusted trade surplus weighed in at E21.8 billion in September. This was up from a slightly smaller revised E21.3 billion in August and the most black ink since April last year. Unadjusted, the surplus was E24.1 billion, a small improvement on the E23.7 billion recorded in September 2016.

However, the increase in the adjusted headline masked contractions in both sides of the balance sheet. Hence, exports declined 0.4 percent on the month, their first drop since June, while imports shrank a sharper 1.0 percent, also their worst performance in three months. Annual growth of the former was 4.6 percent, down from 7.3 percent in August, and of the latter, 5.5 percent after 8.2 percent.

The September report makes for a third quarter surplus of E63.0 billion. This is 3.6 percent larger than in the second quarter when total net exports subtracted 0.3 percentage points off quarterly real GDP growth. The signs are that net external trade at least made a less negative contribution last quarter.

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.