The seasonally adjusted surplus narrowed from July's upwardly revised €17.7 billion to €16.6 billion in August. This was €0.6 billion above the market consensus but also a 3-month low. Unadjusted, the black ink stood at €14.4 billion versus just €0.4 billion in August 2022.

The headline deterioration reflected falls in both exports, which were down 1.2 percent on the month, and imports, which declined 0.4 percent. Exports are now at their lowest level since March 2022 and imports at their weakest mark since January last year. Unadjusted annual growth of the former slipped from minus 1.6 percent to minus 5.8 percent and of the latter from minus 12.4 percent to minus 16.7 percent, the most negative reading since May 2020. Sales to the rest of the EU dropped a monthly 1.5 percent while imports from the region rose 1.9 percent. Exports to non-EU states fell 0.9 percent while imports were off 3.0 percent.

The August update pushes both the German RPI (minus 9) and the RPI-P (minus 7) back below zero although current levels indicate only very minor underperformance by the economy as a whole.

Germany's goods balance is expected to hold steady at a €16.0 billion surplus in August versus a surplus of €15.9 billion in July that was smaller than expected and reflected a 1.4 percent monthly rise in imports together with a 0.9 percent decline in exports.

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.