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Boost for German Trade Balance

James Boston
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The Eurozone’s largest economy posted a stronger than expected trade surplus in July according to data just released by the German State Statistics Department. The seasonally adjusted Trade Balance has been announced as a positive €22.2Bn compared to just €16.4Bn in the month of June, there was no expectation for the July numbers to improve on this revised June reading.

Germany’s Current Account underwent a corresponding boost in the same month. On a non seasonally adjusted basis the Current Account produced a surplus of €21.7Bn in comparison to the €17.2 revised statistic for June.

The prime driver for Germany’s profit on the month was Exports, these surged an unexpected 4.7% to €98.2Bn, this represents an acceleration of the export market which in June only grew 0.9%, the anticipation was for a slowing to 0.5% in the July number. Germany’s overall exports are holding up strongly in the face of a fall off in trade with Russia, in the first six month’s of 2014 exports to Russia from Germany fell by 15.5%. However today’s data release shows that Germany’s exports to the Eurozone grew 6.2% on the month while exports to the rest of the world accelerated by 7.2%. A further weakening of the Euro should add additional impetus to Germany’s trade surplus, particularly in the growing UK and US markets.

There was also surprise on the Import side of the equation. Germany posted a month on month fall in imported goods and services of -1.8% for the month of July. This marks a turnaround from June’s growth of 4.5% and surprised analysts that were expecting a fall off of just -0.7% on the month. Despite a healthy employment situation, German consumers have been engaging in some belt tightening over the past couple of month’s as consumer confidence has taken a hit, this has lead to the fall off in domestic demand as larger purchases are postponed in the face of economic uncertainty.

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