Imports surge raises hopes German growth is holding up
Europe's powerhouse offsets the faltering periphery in Q2 data
GERMAN imports surged 6.3pc in May, sparking hopes that Europe's largest economy could still act as a "locomotive" for the rest of the region.
Higher imports will help countries which sell to Germany, but both exports and imports rose much faster than analysts had expected.
Exports jumped 3.9pc in the month, compared with a median forecast of 0.2pc from 13 economists surveyed by Bloomberg News.
Germany's controversial surplus with the rest of the world -- which many economists say needs to shrink as part of a eurozone recovery -- fell during the month.
The surplus in the current account, a measure of all trade including services, was €9bn, down from €11bn a month earlier. The surplus on goods increased to €15.3bn, from €14.5bn in April, the official statistics showed.
The figures suggested the very poor trade data recorded for April might not be a harbinger of immediate recession.
Factory orders and industrial production both rose in May.
"All in all, the data suggest that resilient exports to emerging markets and strong domestic demand offset the weakness in demand from other European countries in the second quarter," said Holger Schmieding, chief economist at Berenberg Bank in London.
"Unfortunately, leading indicators point to a serious loss in German momentum for the summer months," he added.
German investor confidence had the biggest plunge since 1998 last month and business sentiment dropped to a two-year low.
Figures yesterday showed French business confidence declining to the lowest in almost three years in June.
"Germany continues to exhibit resilience in the face of the presumed global slowdown," said Klaus Baader, senior economist at Societe Generale in Hong Kong.
"Given the latest manufacturing orders data, which showed a healthy bounce, there is little near-term risk that German exports will collapse. But there are certainly plenty of risks in the euro area."
The International Monetary Fund forecasts that the euro area economy will contract by 0.3pc this year, compared with projected expansions of 2.1pc in the United States and 8.2pc in China, but Germany will grow by 0.6pc.