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Economy in Brief

Euro Exports Regain Their Step But They Are Still Overtaken By Imports
by Robert Brusca   October 15, 2010

In Europe the trade picture deteriorated even as exports recovered strongly from their slump in July. Goods exports rose by 1% on the month, shaking off a 0.2% decline in July.

Imports of goods, a series that had declined by a sharp 1.3% in July (m/m), surged ahead gaining 1.8% (m/m) in August. As imports were stronger than exports, the trade deficit for the Zone deteriorated rising to a deficit of €1.4bln from a deficit of €0.2bln (revised) in July.

Despite the monthly rebound in both exports and in imports exports have lost momentum Yr/Yr Imports are now consistently starting to outdistance exports, at least in their Yr/Yr growth.

Raw materials imports are up especially sharply Yr/Yr in the midst of a global push on commodity prices spurred by an ongoing bump-up in the price of oil. Still, the euro has been gaining Vs the dollar; that will take some sting out of the rise in dollar prices of global commodities in the months ahead; there is already evidence that nominal flows are being reduced as the strong euro has worked its magic in recent months.

Still export and import trends may be in flux. Over three-months exports are stronger but over six months import growth is superior.

Over the last six months the 14-month string of trade surpluses has been diminished and turned to outright deficits over the last four. That tells you something about the balance of export and import growth. Still, there is scant evidence that domestic demand has picked up in the Zone. For that determination we are still waiting. Until then, exports and imports may continue to play tag with their short term growth rates.

Euro-Area Trade Trends For Goods
  M/M% % SAAR
  Aug-10 Jul-10 3M 6M 12M 12M Ago
Balance* € (1,368) € (248) € 2,778 € (935) € (819) € (2,564)
EXPORTS
All Exp 1.0% -0.2% 27.8% 29.2% 28.0% -21.8%
Food and Drinks -0.9% -1.5% 10.6% 14.2% 15.3% -11.2%
Raw materials -4.8% 1.6% 5.4% 13.3% 22.4% -17.5%
Other 1.3% -0.1% 29.8% 30.8% 29.2% -22.7%
 MFG 0.0% -1.7% 21.1% 32.5% 28.1% -22.6%
IMPORTS
All IMP 1.8% -1.3% 21.3% 37.9% 29.9% -25.7%
Food and Drinks 0.8% -2.3% 11.2% 23.7% 13.5% -10.1%
Raw materials -1.3% -0.7% 13.1% 76.6% 57.7% -37.6%
Other 2.1% -1.2% 22.5% 37.2% 29.8% -26.0%
  MFG 0.4% -1.1% 21.3% 37.7% 29.0% -21.2%
*Eur mlns; mo or period average (SA, WDA)
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