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Monday, July 08, 2013 2:23 PM

German Exports Decline Significantly and "Unexpectedly"

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Given that all of Europe is in a major recession and it is nearly impossible for the German export machine to keep cranking in such circumstances, the only real surprise is how long it took for German exports to the rest of the eurozone to plunge.

Nonetheless most economists were surprised by the news Germany's Recovery in Question as Exports Decline Significantly.

German exports declined in May at their fastest pace since 2009 because of the slowdown in key European and China markets, adding to worries that the country's recovery was losing momentum.

The Federal Statistical Office said that exports declined by 2.4% in calendar-adjusted terms from the previous month to €90.4bn ($116bn/£78bn). Economists expected a 0.1% increase in exports.

Germany's trade surplus declined to €13.1bn from €18bn in Apil. The surplus in the current account, a measure of all trade including services, was €11.2bn in June, down from €16.7bn.

On a year-on-year basis, exports declined by 4.8%, primarily due to a 9.6% decline in demand from other countries in the euro area. Imports declined by 2.6% from the year-ago month.

Exports to the eurozone, where Germany sends 40% of its shipments, declined by 9.6% from the year-ago month, and exports to the European Union (EU) fell by 7.1%. Export demand from countries outside the EU declined by 1.6%, with the slowdown in China have an impact on trade. With the slowdown in the EU, many German manufacturers had looked at China, the second largest economy, as an alternative.

The economy returned to modest growth of 0.1% in the first quarter and is expected to pick up further. The eurozone contracted in the first quarter of 2013, a sixth consecutive quarterly fall.

  • German exports overall down 4.8% from a year ago
  • German exports to eurozone down 9.6% from a year ago
  • German exports to EU down 7.1% from a year ago
  • German exports outside the EU down 1.6% from a year ago

Recovery? What Recovery?

For some inexplicable reason economists expect the German economy to "pick up further".

I expect Germany to sink back into recession (not that it really ever left recession).

0.1% growth is a rounding error, not "growth".

Mike "Mish" Shedlock

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