Broad-Based Trade Activity Declines Notwithstanding Higher Surplus

The German trade surplus widened more than forecast, to E24.9bln (seasonally-adjusted, vs E20.3bln cons; E22.2bln prior, revised from E22.1bln) amid a heavy drop in imports of 6.6% M/M (vs -1.0% cons; +1.2% prior, revised from +2.0%). Exports also fell but less so than imports, at -3.6% M/M (vs -2.8% cons; +1.7% prior, revised from +1.6% prior).

• While these are nominal, not real, figures and thus don't account for price volatility, to put it into perspective, the trade surplus widened to the equivalent of about 6.2% of nominal GDP on a 12-month rolling basis - up from about 6.0% last month and the highest since March 2020.
• Two conclusions remain:
  • Even though the higher trade surplus will be accounted for positively from a GDP growth perspective, diminishing bilateral trade volumes (the sum of ex- and imports, which are back to December 2023 levels) can be considered a rather weak sign for the German economy going forward.
  • The data adds to the narrative of stalling intraregional trade in the EU ('EUROZONE: Stalling Intraregional Trade': MNI, Jul 4).
• The declines were quite broad-based. Exports to the EU (-2.5% M/M vs +1.2% prior), the US (-2.9% M/M vs -0.7% prior), China (-10.2% M/M vs +1.0% prior) and the ex-EU/US/CN category (-4.9% M/M vs +2.4% prior) all fell. Imports fell considering EU (-8.9% M/M) and the ex-EU/US/CN (-8.2% M/M) categories, which inclines from the US (+4.6% vs -0.7% prior) and China (+1.7% M/M vs -12.3% prior) were not able to make up for.

MNI, Destatis