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Economy in Brief

EMU Trade Surplus Grows as Imports Steady and Exports Accelerate
by Robert Brusca October 18, 2007

European trade is proving to be resilient in the face of a strongly rising euro currency. Some of this is undoubtedly the reflection of true strength, but some is also the acumen of the European exporters who have learned to use markets to hedge and some perhaps to giving back some profit margins as the euro puts an increasingly strong squeeze on margins and makes even hedging less of a dodge for foreign exchange rate induced pressures. Euro area data show that foreign orders have been slipping and remarks by policymakers and businesses leaders indicate that businesses are feeling the pinch. So far the data only show that exports are not just growing but also accelerating. Imports have slowed and that is particularly clear in the six-month growth rates. Over three months both exports and imports are locked into some real strength. The growing surplus is again poised to augment EMU growth in Q3.

E-zone 13-Trade Trends for Goods
  m/m% % Saar
  Aug-07 Jul-07 3M 6M 12M
Balance* €€ 4,345 €€ 809 €€ 3,301 €€ 3,650 €€ 2,679
All exports 4.9% -0.9% 28.9% 11.9% 12.8%
Food and drinks 2.8% 2.5% 36.5% 10.7% 13.4%
Raw materials -0.6% -1.5% 0.4% 9.5% 12.6%
MFG 2.8% -0.3% 26.1% 6.3% 11.5%
All imports 2.0% 2.4% 27.7% 7.1% 6.5%
Food and drinks -0.1% 0.7% 22.7% -2.7% 6.2%
Raw materials 0.2% 2.3% 19.5% 2.1% 6.1%
MFG 0.5% 1.5% 23.3% -0.8% 8.7%
*Million Euros; mo or period average
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