Export Rebound From China to Germany Signals Recovery
German exports increased 0.6 percent from May, when they dropped a revised 2 percent that was less than originally estimated, the Federal Statistics Office in Wiesbaden said today. Chinese shipments overseas climbed 5.1 percent in July from a year earlier after sliding 3.1 percent in June, according to the General Administration of Customs in Beijing. The nation’s sales to the U.S. and European Union, its biggest markets, advanced for the first time in five months.
Demand for German-made goods is reliant on the 17-nation euro area, the country’s largest export destination, emerging from its longest-ever recession. European Central Bank President Mario Draghi has pledged to keep interest rates low to support a return to growth, while saying the risks remain on the downside. The economy in China, Germany’s third-biggest trading partner last year, has cooled the past two quarters.
“The economic slowdown in China has left its mark” on German exports, said Stefan Kipar, an economist at BayernLB in Munich. “Against the background of a gradually recovering euro area, German trade is expected to gain impetus in the summer months.”
The euro rose after the German data. The currency traded at $1.3344, up 0.1 percent, at 10:06 a.m. in Frankfurt. The benchmark DAX stock index was 0.1 percent higher at 8,269.7. Asian stocks outside Japan gained, with the MSCI Asia Pacific excluding Japan Index up 0.7 percent at 437.91.
Germany’s trade surplus widened to 16.9 billion euros ($22.6 billion) in June from a revised 13.6 billion euros in May, today’s report showed. The surplus in the current account, a measure of all trade including services, increased to 17.3 billion euros from 11.2 billion euros.
China’s export gain was more than twice the median estimate of 2 percent in a separate Bloomberg survey. Imports rose 10.9 percent, leaving a trade surplus of $17.8 billion. Improved trade may bolster Premier Li Keqiang’s chances of achieving the year’s 7.5 percent target for economic expansion.
Trade data had shown a slowdown starting in May after the government cracked down on fake invoices that inflated figures earlier in the year. The quality of the data has “improved a lot,” Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said in a note today.
Chancellor Angela Merkel will seek a third term as German leader on Sept. 22 on the strength of shielding her country from the worst effects of the euro area’s debt crisis. The nation’s AAA credit rating was affirmed by Fitch Ratings yesterday, which said Merkel’s government had beaten its own budget targets and positioned Europe’s largest economy on the path to growth.
European countries accounted for 69 percent of German exports last year, according to the Federal Statistics Office in Wiesbaden. About 16 percent of goods went to Asia and 12 percent to the U.S.
Manufacturing in the euro region expanded in July for the first time in two years, according to a survey of purchasing managers by London-based Markit Economics. The U.S. economy grew at a 1.7 percent annualized rate from April through June after a 1.1 percent pace in the first quarter. The Federal Open Market Committee has kept its benchmark interest-rate target at a record low of zero to 0.25 percent since 2008.
While German exports rose, they missed the 0.9 percent median estimate in a Bloomberg News survey of economists, and imports unexpectedly fell 0.8 percent. The Bundesbank said last month that it sees the German economy slowing after it expanded “strongly” in the second quarter.
German and euro-area gross domestic product data for the three months ended June will be released on Aug. 14. The currency bloc’s economy shrank in the six quarters through March. The ECB kept its benchmark interest rate at an all-time low of 0.5 percent on Aug. 1 and said it would keep rates at or below current levels for an extended period.
Germany has been less reliant on the euro area for its exports this year, according to ING Groep NV.
“As a consequence, the future path of German exports will be determined by two opposing trends: the recovery in the U.S. and the U.K. and the slowdown in emerging economies,” said Carsten Brzeski, senior economist at ING in Brussels. “German exporters remain highly dependent on the global economy.”
U.K. indexes of services, manufacturing and construction all exceeded economists’ forecasts last month, signaling continued momentum in the economy after 0.6 percent growth in the second quarter.
Separately, Australian employers unexpectedly cut payrolls in July and unemployment held at an almost four-year high. That may dent Prime Minister Kevin Rudd’s bid for a come-from-behind victory in Sept. 7 elections.
The number of people employed fell 10,200, the statistics bureau said in Sydney today. That compares with the median estimate for a 5,000 rise in a survey of 24 economists. The jobless rate held at 5.7 percent as fewer people sought work.
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