BERLIN: The headline German trade surplus declined to EUR19.5bn for July from EUR24.8bn the previous year. In seasonally-adjusted terms, there was a decline to EUR19.4bn from a revised EUR21.4bn the previous month and was significantly lower than the expected figure of EUR21.0bn.
Adjusted exports declined 2.6% on the month to give an annual 10.0% contraction, while there was a 0.7% retreat in imports for the month to give a 6.5% decline on the year. Both exports and imports were considerably weaker than expected.
There was an annual decline in exports of 7.0% to the EU, while exports to non-EU countries declined by 13.8%. For the first seven months of the year, there was a small 1.7% increase in exports to the EU with a 3.2% decline in shipments to other countries.
There will be further concerns surrounding potential declines in exports to the UK given that the Euro has strengthened significantly against Sterling since the UK June referendum.
There will, however, be important concerns surrounding the overall export performance given a sharp monthly deterioration. The Euro overall is still competitive in global markets, especially for German companies and the data either suggests that global demand is much weaker than expected or there are increased structural weaknesses in German industry. There will also be concerns that other Eurozone economies will see a further deterioration in exports, increasing unease surrounding the overall outlook.
The Euro was marginally weaker with EUR/USD dipping to 1.1275 from 1.1285, while German bunds opened slightly lower after heavy losses on Thursday.
