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Economy in Brief

German Surplus in Trade Remained in June but was Narrowed Sharply by Surging Imports
by Robert Brusca August 8, 2007

German trade trends are showing sharp wild swings in their interval growth rates. The trends on the accompanying chart show a more stable longer pattern from early 2006 through early mid-2007 import trends worked lower. Export trends worked lower from October 2006 through April of 2007. At mid-year German exports are showing some tendency for firmness while imports have jumped sharply. German chemical and machinery exports are continuing to hold up.

For the quarter exports have risen by 2.5% compared to a drop of 1.2% for imports. While these are nominal figures the inflation adjusted figures should show a contribution of net exports to GDP growth in 2007-Q2. But the surge in imports later in the second quarter could be laying the groundwork for a lasting import gain that could make net exports a drain on Q3 GDP. It is too soon to know about such things, but one thing Germany is continuing to look for is for the consumer sector to kick in to help out with second half growth. With the broad inflation adjusted euro at such a peak, more domestic demand help could be essential to maintaining the growth trend, especially if the import surge lasts.

German Trade Trends for Goods
  m/m% % Saar
Jun-07 May-07 3M 6M 12M
Balance* €€ 14.88 €€ 17.39 €€ 16.04 €€ 15.70 €€ 15.30
All Exports 2.1% -0.9% 8.6% 6.4% 12.1%
Capital goods -- 1.0% -6.6% -6.5% 9.4%
Motor Vehicles -- 3.4% 1.9% 14.0% 7.7%
Consumer Goods -- -5.8% -0.3% 7.2% 13.0%
All Imports 6.7% -3.6% 15.8% 6.0% 9.2%
Capital goods -- -1.9% -25.8% -10.4% 6.5%
Motor Vehicles -- 6.4% 20.1% 8.2% 16.9%
Consumer goods -- -7.3% -29.0% -2.1% 1.3%
*Billions of euros; monthly or period average; Shaded area trends lag one month
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