German exports plunge in May, steepest declines in nine months
Published 08/07/2016 | 09:27
German exports fell unexpectedly in May, posting their steepest monthly decline in nine months, and imports rose less than expected, data showed on Friday, in a further sign that weak global demand is curbing growth in Europe's largest economy.
The disappointing trade figures fleshed out a picture of economic weakness in Germany after data released earlier this week showed industrial output posted its biggest monthly drop in nearly two years and orders also came in weaker than expected.
"Another indicator signaling that Germany's performance is currently not champion-like," ING Bank economist Carsten Brzeski said, adding that the only region to which German companies had exported significantly more than last year was the euro zone.
He pointed out that the German trade surplus with the single currency bloc was widening again, suggesting that buoyant domestic demand in Germany was not necessarily benefiting the rest of the euro zone.
Overall, seasonally adjusted exports dropped 1.8 percent on the month, data from the Federal Statistics Office showed. This was the biggest monthly fall since August 2015 and below the consensus forecast in a Reuters poll for a 0.25 percent rise.
Seasonally adjusted imports inched up 0.1 percent on the month, the data showed, short of market expectations for an increase of 0.4 percent.
The plunge in exports narrowed the seasonally adjusted trade surplus to 22.2 billion euros ($24.6 billion) from a revised 24.1 billion euros in April which was the highest monthly value so far.
"German export development is sluggish so far this year," DIHK foreign trade director Volker Treier said. Trade with European Union countries was the only reason unadjusted exports rose 1.6 percent on the year in May, he said.
"Outside the EU, there is hardly any growth potential due to global crisises and low oil prices."
The data pointed to a sharp slowdown of German industry, and the loss of economic momentum had infected almost all global regions, Brzeski said.
The overall weak global demand is hampering one of German exporters' strengths, namely diversification in products and export markets, he said.
Germany's economy grew by 0.7 percent in the first quarter, its strongest quarterly rate in two years. Soaring private consumption, higher construction investment and state spending on refugees more than offset a dip in trade.
For the second quarter, analysts expect economic growth to slow drastically. Some economists say it could come to a near-halt and expand by just 0.1 percent.
Dekabank analyst Andreas Scheuerle said even if June data across the economy came in unchanged compared with the weak May figures, Germany might see an economic contraction in the second quarter.