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German Exports Increased More Than Forecast in May: Economy

German Exports Increase More Than Forecast
Newly-manufactured Porsche Cayenne automobiles are seen parked outside the company's factory in Leipzig, Germany. Photographer: Michele Tantussi/Bloomberg

German exports rebounded more than economists forecast in May, helping Europe’s largest economy to weather the sovereign debt crisis.

Exports, adjusted for work days and seasonal changes, jumped 3.9 percent from April, when they fell 1.7 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a 0.2 percent increase, according to the median of 13 estimates in a Bloomberg News survey. Imports surged 6.3 percent.

The European Central Bank cut interest rates last week as the debt crisis threatens to tip the euro area, Germany’s largest export market, into recession. While German business and investor confidence have slumped amid signs growth is slowing, record-low unemployment and demand from outside the euro region have helped insulate the economy. 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.”

Investor confidence plunged the most since 1998 last month and business sentiment dropped to a two-year low.

French Confidence

French business confidence declined to the lowest in almost three years in June, adding to signs of slowdown in the region’s second-largest economy. Sentiment among French factory executives fell to 91, the lowest since August 2009, from 92 in May, the Bank of France said in a statement in Paris today.

European stocks fell for a fourth straight day, and Asian stocks and U.S. equity futures declined after Japanese machinery orders dropped and Chinese Premier Wen Jiabao said the nation’s economy faces “relatively large” downward pressure. The Stoxx Europe 600 Index slipped 0.6 percent to 252.83 at 11 a.m. in Frankfurt.

The International Monetary Fund forecasts the euro-area economy will contract 0.3 percent this year, compared with projected expansions of 2.1 percent in the U.S. and 8.2 percent in China. It predicts 0.6 percent growth in Germany.

Germany’s trade surplus increased to 15.3 billion euros ($18.8 billion) in May from 14.5 billion euros in April, today’s report showed. The surplus in the current account, a measure of all trade including services, was 9 billion euros, down from 11 billion euros a month earlier.

German Resilience

“Germany continues to exhibit resilience in the face of the presumed global slowdown,” said Klaus Baader, senior economist at Societe Generale SA 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.”

German carmakers Porsche SE and Volkswagen AG are likely to report increased vehicle deliveries this year, though “the second half of 2012 is certain to become more difficult and challenging for the automotive industry as a whole,” Chief Executive Officer Martin Winterkorn said on June 25.

Siemens AG Chief Financial Officer Joe Kaeser indicated on June 26 that it will be more difficult to meet financial targets set for 2012 as demand tapers off at some industrial automation units and Chinese growth fails to pick up.

Chinese inflation eased to a 29-month low of 2.2 percent in June, the government said today in Beijing.

China lowered benchmark interest rates on July 5 for the second time in a month. Wen said the government will intensify its response to the economy’s slowdown as growth wanes in Asian neighbors from Japan to Vietnam, the official Xinhua News Agency reported yesterday.

The latest reading on the U.S. economy will come via consumer credit data to be released today.

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