German Trade Surplus Sharply Declines In Aug; Exports Fall Unexpectedly

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German trade surplus declined sharply in August on an unexpected fall in exports, official data showed Friday. However, foreign trade is expected to pick up considerably in the months ahead.

The trade surplus decreased to EUR 8.1 billion in August from July's EUR 14.1 billion, a report from the Federal Statistical Office showed. This was also smaller than the expected surplus of EUR 12 billion and last year's EUR 10.8 billion.

Both exports and imports recorded a double digit annual decline in August. While, exports decreased at a faster pace of 20% in August from the prior year, decline in imports slowed to 19.3%.

Upon calendar and seasonal adjustment, the foreign trade balance recorded a surplus of EUR 10.6 billion, down from EUR 12.5 billion in July. On a monthly basis, exports fell for the first time in four months. Exports were down 1.8% in August, reversing July's 1.7% rise. Economists were expecting a monthly growth of 1.9%. Meanwhile, imports rose 1.1%, larger than the 0.1% increase seen in July and 0.9% expected by economists.

According to provisional results of the Deutsche Bundesbank, the current account surplus fell to EUR 4.6 billion from EUR 11.4 billion in July. The current account had showed a surplus of EUR 8.1 billion in August 2008.

In August, Germany exports to the member states of the European Union declined 19.3% to EUR 37.9 billion, while imports from those nations slid 16.8% to EUR 33.8 billion. At the same time, dispatches to euro area was EUR 25.2 billion in August, down 17.6% from the previous year and imports from those nations decreased 15.8%. Meanwhile, Germany exported commodities worth EUR 22.5 billion to countries outside the EU, while imports from those countries stood at EUR 18.5 billion.

Commenting on the German external trade data, Commerzbank analyst Simon Junker said the economy should have grown at a much stronger rate in the third quarter than in the second quarter. In the third and fourth quarters, the largest eurozone economy should post above-average growth, the analyst noted.

A huge slump in global demand developed as a result of the Lehman uncertainty is now showing signs of rebound, said Junker. This would provide impulse to German exports in the coming few months and the increasing foreign orders confirm this, the analyst said.

In August, German factory orders increased 1.4% from the previous month and industrial production rose 1.7%. The Federal Ministry of Economics and Technology now expects industrial production to increase in the third quarter.

In a separate communique, the Federal Statistical Office said turnover in the German manufacturing sector dropped by a real 16.4% in August compared to an annual fall of 16.7% in July. Month-on-month, real turnover in manufacturing increased 2.6%, following July's revised 0.5% fall.

German trade surplus declined sharply in August on an unexpected fall in exports, official data showed Friday. (Market News Provided by RTTNews)