The seasonally adjusted merchandise trade surplus widened out significantly in January. A €27.5 billion excess was well above December's upwardly revised €23.3 billion and even further above the market consensus. It was also much larger than anything seen in 2023 and indeed, a multi-year high. Unadjusted, the surplus stood at €22.6 billion, similarly a marked increase on the €17.6 billion posted a year ago.

Moreover, the monthly headline improvement reflected strong growth in both sides of the balance sheet with exports up a particularly steep 6.3 percent, their best performance since June 2020, and easily outpacing a 3.6 percent gain in imports. The jump in the former was enough to lift unadjusted yearly growth to 1.5 percent, its first positive reading since last June. However, its import counterpart remained sub-zero at minus 7.5 percent. Exports to Russia were down 34.2 percent versus January 2023 while imports were off fully 82.4 percent.

January's surge in the black ink leaves a rising trend in the surplus and puts exports at their highest level since February 2023. Imports stand at just a 2-month peak. Today's update puts the German RPI at minus 4 and the RPI-P at 4, both values showing overall economic activity performing much as the forecasters predicted.

January's goods balance is expected to narrow to a €21.0 billion surplus versus a greater-than-expected surplus of €22.2 billion in December that, however, masked large declines for both exports and especially imports.

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.