EUROZONE DATA
The Euro-area goods trade surplus is still slowly improving in trend terms, reaching 1.2% nominal GDP on a 12mth rolling basis as of today's data for September (vs 0.7% in January). It is however yet to fully recovery from the 2022 terms of trade shock following Russia’s invasion of Ukraine, compared to a long-term average of 1.6% GDP.
- In addition to the already sluggish growth in intra- and extra-regional exports (particularly in historically important markets such as transport equipment), the threat of increased US trade protectionism following the election result (despite no concrete details at this stage) has bolstered the case for more aggressive ECB easing next year.
- Intraregional exports fell 5.0% Y/Y (vs -6.3% prior) in September, while extra-Euro area exports were -0.9% lower (vs -1.8% prior). Although intra-regional trade data for “Machinery and transport equipment” is not yet available for September, extra-Euro area exports fell 1.7% Y/Y for the second consecutive month (the weakest rate since April 2021).
- Although net exports made a stronger-than-expected contribution to real GDP in the first half of 2024, this was led by the services component, which contributed an average 0.5pp to quarterly growth in Q1 and Q2. Meanwhile, the goods component contributed just 0.1pp on average in Q1 and Q2.
- The ECB made a downward revision to its Q3 and Q4 export growth projections in September due to “ongoing competitiveness issues”.
- The weak outlook for goods trade has added a further headwind to growth for the region, with policymakers already concerned by the lack of recovery in consumption and absent trends in gross fixed capital investment.
- The October PMIs marked a 32nd fall in aggregate Eurozone new export business, led by the manufacturing sector. An update on these trends will be provided on Friday with the November flash PMIs.
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