German exports unexpectedly edge down in May

GERMAN exports fell unexpectedly in May, as exports to the US and Russia posted strong declines.

German exports decreased by 0.1 per cent on the previous month, data from the federal statistics office showed on Tuesday (Jul 4). A Reuters poll had predicted a month-on-month increase of 0.3 per cent.

“Trade is no longer the strong resilient growth driver of the German economy that it used to be, but rather a drag,” said Carsten Brzeski, global head of macro at ING.

Supply chain frictions, a more fragmented global economy and China increasingly being able to produce goods it previously bought from Germany, are all factors weighing on German exports, Brzeski said.

Exports to European Union countries were down 1.5 per cent on the month, while exports to the US fell by 3.6 per cent and exports to Russia by 7.4 per cent, the office said.

“Weakening impulses from the US are particularly significant,” said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank. “As things stand, the export sector will post another quarterly decline in exports.”

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Imports rose 1.7 per cent on the month, the data showed.

The foreign trade balance showed a surplus of 14.4 billion euros (S$21.1 billion) in May, down from 16.5 billion euros the previous month.

Sentiment in the German export industry deteriorated noticeably in June, a survey by the Ifo Institute showed last week.

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“In addition to weak demand on the German domestic market, we are now also seeing fewer orders from abroad,” said Klaus Wohlrabe, head of surveys at Ifo. He added that this is bad news for Germany’s export economy.

“This once again reinforces the suspicion that an economic recovery will not materialise for the time being,” said Thomas Gitzel, chief economist at VP Bank. REUTERS