Germany's trade performance was mixed in the month of August. Exports rose modestly by 1.3 percent from the previous month to €131.9 billion, reflecting a minor 0.1 percent growth year-over-year. In contrast, imports saw a sharp decline, falling by 3.4 percent month-over-month to €109.4 billion and down 3.1 percent from August 2023. These movements led to a trade surplus of seasonally adjusted €22.5 billion, well above the market consensus and a significant increase compared to both July 2024 (€16.9 billion) and August 2023 (€18.9 billion).

Trade with the EU showed positive growth in exports (0.8 percent), while imports fell (minus 3.7 percent). Notably, exports to the United States surged by 5.5 percent, while exports to China rose by 1.9 percent. Imports from China remained dominant but declined by 1.4 percent. Trade with Russia continued to drop, with exports down 9.5 percent from July 2024 and 11.8 percent compared to the same period in 2023, largely reflecting ongoing geopolitical tensions.

Overall, exports have increased in the last two months but only after back to back falls and the July/August average is still 0.9 percent short of the second quarter mean (and even further below the first quarter). Today's update leaves the RPI at 14 and RPI-P at 25, meaning that economic activity in general is outperforming the market consensus.

August's goods balance is expected to widen to a €18.4 billion surplus versus a narrower-than-expected surplus of €16.8 billion in July.

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.