DE: Merchandise Trade

Mon Apr 09 01:00:00 CDT 2018

Actual Previous Revised
Level E19.2B E21.3B E21.5B
Imports-M/M -1.3% -0.6% -0.2%
Imports-Y/Y 4.7% 6.7% 6.9%
Exports-M/M -3.2% -0.4% 0.4%
Exports-Y/Y 2.4% 8.6% 8.6%

The trade surplus narrowed by more than E2 billion from a slightly larger revised E21.5 billion in January to E19.2 billion in February, the smallest outturn since January 2017. Unadjusted, the black ink stood at E18.4 billion, a E1.4 billion shrinkage from a year ago.

The deterioration in the adjusted data reflected a 3.2 percent monthly drop in exports that more than offset a 1.3 percent decrease in imports. For both sides of the balance sheet, this was their second consecutive contraction and, at E107.5 billion, exports now stand at their lowest level since last October. Compared with a year ago, unadjusted export growth was a modest 2.4 percent while imports were up 4.7 percent.

At E20.4 billion, the average black ink in January/February was nearly 5 percent below its mean level in the fourth quarter when it expanded more than 3 percent. March may well see a rebound but it looks unlikely that total net exports last quarter will be able to match the 0.5 percentage point boost that they provided to economic growth in October-December.

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.