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Economy in Brief

Euro-Area Trade Goes With The Flow But Still Slows
by Robert Brusca  June 17, 2011

Euro-Area trade flows have lost some momentum, but the Zone-wide deficit continues to get larger. Import growth exceeds export growth over 12-months and 6-months but has given ground over 3-months. Still it’s not enough time to tell if the trend is actually shifting. There has been as shift for trade overall as well for MFG goods alone.

Euro-Area trade flows have slowed sharply in March but have perked up in April. As a result the Yr/Yr flow over the past 12-months is pretty much the same as it was 12-months ago. Overall trade flow speed is being maintained in the Zone in the aggregate.

Still raw materials flows have slowed more for exports than for imports, And manufacturing trade on both sides has slowed rather markedly. Exports are down to a 6.4% 3-month growth rate annualized from 14.5% Yr/Yr. On the import side flows have slowed for MFG to 1.1% over 3-months annualized from 12.7% Yr/Yr.

The slowing that we are seeing in other parts of the EMU economy are being revealed in the MFG flows which have demonstrated a sharp pull back. This pull back is hidden by the continued strength in other trade components and especially by raw materials. Food exports remain strong in the Zone while the import flows of foods have slowed.

On balance the trade picture seems benign in the aggregate. But the underlying export and import trends for manufacturing alone suggest that there is a slowing in progress and it seems to be hitting imports harder. That speaks to a gradual loss in domestic demand within the zone itself.

Euro-Area Trade trends for goods
  M/M% %SAAR
  Apr-11 Mar-11 3M 6M 12M 12M Ago
Balance* €  (2,908) €  (2,178) €  165 €  (2,675) €  1,755 €  (4,388)
Exports
All Exp 0.6% 0.6% 11.5% 15.4% 16.7% 17.6%
Food and Drinks -4.4% 4.8% 12.9% 19.2% 14.8% 9.2%
Raw materials -1.3% 0.3% -8.0% 10.3% 16.6% 31.0%
Other 1.1% 0.3% 12.0% 15.3% 16.9% 18.0%
  MFG -1.8% 0.9% 6.4% 7.9% 14.5% 14.1%
IMPORTS
All IMP 1.1% 0.3% 9.0% 25.6% 20.5% 18.5%
Food and Drinks -1.5% 0.4% -4.3% 14.7% 15.5% 2.3%
Raw materials 0.2% 2.5% 26.8% 44.1% 32.9% 45.7%
Other 1.3% 0.1% 8.9% 25.3% 20.2% 18.6%
  MFG -2.6% 0.7% 1.1% 9.4% 12.7% 16.3%
*Eur mlns; mo or period average (SA, WDA)
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