DE: Merchandise Trade

Fri Dec 08 01:00:00 CST 2017

Actual Previous Revised
Level E19.9B E21.8B E21.9B
Imports-M/M 1.9% -1.0% -1.2%
Imports-Y/Y 8.3% 5.5% 5.4%
Exports-M/M -0.5% -0.4%
Exports-Y/Y 6.8% 4.6% 5.4%

The seasonally adjusted trade balance returned a E19.9 billion surplus in October, down from a marginally larger revised E21.9 billion in September and a 3-month low. Unadjusted, the surplus was E18.9 billion, hardly changed from the E18.8 billion posted a year ago.

The decrease in the adjusted black ink reflected a 0.5 percent monthly fall in exports, their second decline in a row, compounded by a 1.9 percent bounce in imports. However, unadjusted annual growth of the former still climbed from 4.5 percent to 6.8 percent and of the latter from 5.4 percent to 8.3 percent.

The slide in the October surplus, combined with hefty monthly falls in both retail sales (1.2 percent) and industrial production (1.4 percent), suggests that fourth quarter GDP began on a surprisingly soft note. Services probably held up rather better but even so, business activity will need to pick up significantly in November/December to ensure that the German economy ends the year on the expected high note.

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.