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Economy in Brief

German Exports and Import Each Show Withering Trends
by Robert Brusca  December 9, 2011

The trends for German trade are pretty clear. Both exports and imports are slowing rapidly. The balance while showing a diminishing surplus, has been largely trendless and volatile since roughly Mid 2009.

The ratio of export value to import value has been diminishing compared to one year ago and to two years ago. So the nominal trade picture is deteriorating in Germany.

However, the ratio of Real exports to Real Imports has been much more resilient (real data lag one month). The real export to import ratio has risen over that period. So the terms of trade have moved against Germany over the past one and two years. That is export prices have gone up by less than import prices. Much of this is of course the rise in the relative price of energy

But German exports that are showing negative growth rates over three-months in nominal terms are showing strong positive growth rates over three months in real terms. Even over three-months Germany’s export prices are pressured and German exports are fighting their way higher in volume terms on thinner margins. Export orders which are topical through October show a sharp rebound in October after a drop in September making the trend for orders less clear as the three-month trend looks strong again (thorough October) but the six month trend is decidedly weaker at +0.2% at an annual rate. We do not want to place too much weight on three-month trends as they are so volatile.

We can go back and forth on the German data but the clear picture is of some degree of slowing. The volume data lag the nominal data and the nominal data are weaker in the current month so comparing them to one-another may not be so productive. To the extent that volume is holding up in exports by cutting margins it must be strength obtained on borrowed time. However, the problems in the e-Zone are weighing on the Euro and that will breathe some competitiveness back into German exports albeit with much weaker demand all around as global growth is slowing. In the end that is the dominate theme. While the German data show cross currents the most repeated trend is that strength is being undercut for both exports and for imports. Export and domestic order growth has started to sputter to underline that fact.

German Trade Trends for Goods
  M/M% % SAAR
  Oct-11 Sep-11 3M 6M 12M 12MPrev 2Yr Ago
Balance*  €   12.60  €   15.12  €   13.86  €   12.89  €   12.90  €   12.91  €   10.70
Goods Exports -3.6% 1.0% 1.9% 4.4% 6.7% 29.9% 5.7%
Capital gds   -1.3% 9.5% -0.4% 11.0% 25.9% -20.9%
Motor Vehicles   -7.7% 18.9% 5.5% 10.2% 24.5% -18.9%
Consumer Gds   2.2% 10.6% 6.5% 11.4% 11.6% -16.7%
Goods Imports -1.0% -0.5% -6.2% 3.6% 10.7% 34.1% 11.5%
Capital goods   5.6% 8.2% 11.9% 9.0% 17.7% -7.8%
Motor Vehicles   2.6% 3.5% -0.3% 15.2% 9.7% -12.3%
Consumer goods   -5.2% -4.2% 11.1% 17.2% 5.1% -12.0%
ratio X:M 116.7% 119.8% 114.3% 119.2% 121.4% 117.4% 119.6%
Real X -orders 8.3% -5.8% 9.5% 0.2% 7.9% 30.7% 18.3%
Real Exports   1.2% 8.7% 1.3% 5.7% 17.5% -14.9%
Real Imports   -0.1% -4.9% 1.0% 4.0% 8.4% -7.4%
Real Ratio X:M   127.3% 120.6% 127.2% 125.3% 115.7% 125.8%
*Eur Blns; mo or period average; Shaded area trends lag one Mo
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