German Trade Surplus Narrows More-than-expected In August, Industrial Output Growth Beats Expectations

Oct 9, 2007 - The German trade surplus narrowed more than expected in August, official data showed Tuesday. Meanwhile, industrial output growth came in better than expected in August.

The Federal Statistical Office announced that the trade surplus narrowed to 14.1 billion euros in August from 17.9 billion euros surplus recorded in July. The trade surplus narrowed more than the expected 16.4 billion euros in August. However, the trade surplus increased from 11.0 billion euros registered in the prior year. The foreign trade showed a seasonally adjusted balance of 15.3 billion euros in August.

Exports of commodities amounted to 77.7 billion euros in August, up 12.4% on an annual basis. Exports climbed by a seasonally adjusted 3.0% on month compared to a decline of 0.3% in July. This is the highest monthly growth since September 2006. The number came in better than the expected growth of 0.3% in August.

Meanwhile, imports grew 9.5% year-on-year to 63.6 billion euros. The report said imports were up by 5.6% on a monthly basis in August, reversing a 2.8% fall recorded in July. Economists were looking for a monthly fall of 0.8% in imports.

The current account surplus declined to 9.1 billion euros in August from a revised 13.5 billion euros registered in July. A year ago, the current account surplus totaled 5.3 billion euros. Economists were looking for a surplus of 11.0 billion euros in August.

Exports to EU member states amounted to 47.9 billion euros and imports from those countries were valued at 40.7 billion euros. Commodities to the value of 30.3 billion euros were dispatched to the euro area countries in August, while the value of commodities received from those countries was 28.2 billion euros.

Elsewhere, the Ministry of Economy and Technology said that industrial output grew at a faster pace of 1.7% on a monthly basis in August. In July, industrial production showed a monthly growth of 0.2%, revised up from 0.1% initially estimated. The number came in better than the expected growth of 0.4% in August.

Energy output climbed 0.3% from the prior month, while construction output increased 2.0%.

On an annual basis, industrial production improved 5.0% in August, smaller than the 8.1% in July. Meanwhile, industrial production improved by working day adjusted 5.1%, while economists expected only 3.6% growth in August.

During July and August, industrial production rose 1.0% compared to May and June.

Commenting on the German data, Danske Bank economists, Niels-Henrik Bjørn said, “Following stagnating industrial production and exports through most of H1 07 the numbers today seem to (although yet only very tentatively) indicate a fairly strong rebound in German manufacturing.”

A report from the Ifo institute for Economic Research indicated that Business Climate Index for industry and trade slipped to 104.2 in September from 105.8 in the previous month. This was the fourth straight month of decline in the Business Climate Index in September.

The latest GfK survey revealed that the consumer confidence forecast for October tumbled to 6.8.The indicator was higher at 7.4 in September. Consumer confidence fell as a consequence of rising food prices, a higher euro and the roiling international financial markets due to the U.S. sub-prime crisis.

The manufacturing PMI released earlier in the month noted that manufacturing growth moderated in September. The index declined to 54.9 in September from 56.0 in August, the NTC Economics said.