Euro-Area Exports Decline for Second Month Amid Recession

Euro-area exports fell for a second month in October as the economy struggled to pull out of its second recession in four years.

Exports from the 17-nation currency bloc declined a seasonally adjusted 1.4 percent from September, when they fell 1.3 percent, the European Union’s statistics office in Luxembourg said today. Imports rose 0.6 percent in October and the trade surplus narrowed to 7.9 billion euros ($10.4 billion) from a revised 11 billion euros in the previous month. Labor- cost growth accelerated to 2 percent in the third quarter from 1.9 percent in the prior three months, a separate report showed.

The euro-area economy shrank 0.1 percent in the third quarter after a 0.2 percent contraction in the previous three months. The European Central Bank this month lowered its outlook for this year and 2013. Still, investor confidence in Germany, the region’s largest economy, jumped to a seven-month high this month and economic confidence in the euro area unexpectedly rose in November.

“There aren’t many signs that the economy will be improving before the second half of next year,” said Annalisa Piazza, an analyst at Newedge Group in London. “At least, things aren’t going to be worse than this year. Confidence has improved because of the perception that the ECB and European leaders are slowly but surely moving in the right direction.”

Export Declines

The euro was little changed against the dollar after the data, trading at $1.3156 at 11:01 a.m. in Brussels, down less than 0.1 percent on the day.

Exports from Germany fell 3.6 percent in October from the prior month, while imports increased 3.4 percent, today’s report showed. France and Italy reported export declines of 2.1 percent and 1.4 percent, respectively. Shipments from Spain rose 3.8 percent.

“Weak activity is expected to extend into next year,” ECB President Mario Draghi said on Dec. 6. The Frankfurt-based central bank now forecasts the euro-area economy will shrink 0.5 percent this year and 0.3 percent in 2013. Risks to the outlook remain on “the downside,” Draghi said.

The Organization for Economic Cooperation and Development estimated last month that the euro-zone economy will contract 0.4 percent in 2012 and 0.1 percent next year.

Roller-Bearing Maker

Schaeffler AG, the roller-bearing maker that is the biggest investor in car-parts manufacturer Continental AG, last month lowered its 2012 sales forecast because of weaker demand in Europe and Asia. Puma SE, Europe’s second-biggest sporting-goods producer, said in October that it anticipated a performance “significantly below” forecasts amid a weakening consumer climate in Europe and China. On Dec. 12, Puma said Chief Executive Officer Franz Koch would leave the company as earnings decline.

Some investors are confident that the European economy will gather momentum next year and that exporters may benefit from higher demand. Stocks have rallied since Draghi said in July that he would do whatever it takes to save the euro. He announced an unlimited bond-buying program in September and investors are now waiting for countries like Spain to apply for aid from Europe’s bailout fund and to sign up for conditions to trigger ECB debt-market interventions.

Euro-area finance ministers in November eased the terms on emergency aid for Greece and last week approved the release of 49.1 billion euros of payments to keep the country solvent.

Luxury Cars

Bayerische Motoren Werke AG, the world’s biggest maker of luxury cars, said on Dec. 7 that it was targeting higher sales and profit next year and announced in November that it was on track to achieve record sales this year. Deliveries through November rose about 10 percent to 1.66 million vehicles, after a 20 percent jump the month before.

“The euro-area economy reaches its bottom in the fourth quarter of this year,” said Heinrich Bayer, an economist at Deutsche Postbank in Bonn. “From then on, it will go upwards. I expect a stabilization starting in the first quarter of 2013.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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