Current Account Surplus Grows In Sept As Trade Surplus Increases

Germany's current account surplus ticked higher in September (+E28.1bln vs +E22.8bln) with the goods surplus increasing by just over E2bln from +E20.3bln to +E22.5bln and the services deficit shrinking from -E10.3bln to -E6.1bln.

• Partly offsetting the rising positive contribution from net trade was a moderation in net primary income inflows (+E15.8bln vs +E17.4bln prior). Net secondary income changed only slightly (-E4.0bln vs -E4.6bln).
• Net outflows in the financial account were lower than in August (+E22.5bln vs +E31.6bln). Portfolio investment saw net capital imports of E16.6bln (up E9bln from Sept), in large part due to foreign investors parking money in long-term German debt securities. Net "other" and financial derivatives also fell vs September (a combined E17bln fewer net outflows). However these were offset by a large jump in net direct investment abroad (a swing of E17.6bln, as Germans invested much more overseas). Net errors and omissions amounted to a sizeable -E7.1bln (vs +E9.5bln prior).
• Overall the current account surplus totaled E198bln through the first 9 months of 2023, up from E114bln in the same period of 2022, largely due to a drop in goods imports amid softening domestic demand and energy prices.
• Terms of trade (measured by the Bundesbank index) were a bit less of a tailwind for the trade surplus in September than in the months before (96.8 vs 97.9 prior). Still, the terms of trade are notably better for Germany than they were at the worst of the energy crisis in 2022.