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Economy in Brief

Euro-Area Surplus Jumps as Exports Gain Strongly and Imports Flat-Line
by Robert Brusca  January 13, 2012

EMU seems to have posted a one-off result. Imports continue to erode in-line with other reports on economic weakness in the Zone but exports have sprung to life like a thought-to-be-dead vampire springing up from the grave on a foggy night. Gotcha! But this is unlikely to be a reversal of trend. Exports and imports have been in a slowdown mode for some time. Imports actually did strengthen as well going from -0.7% in October to flat in November

Import growth has been weaker than export growth for some time and this configuration has resulted in a widening of the EMU trade surplus, a surplus that jumped this month to €6.1bln in November from €0.5bln in October. The surplus was the largest since July of 2004 and could go a long way toward boosting what has been promising to be weak growth in EMU in 2011-Q4.

Still, the bottom line is that European exports simply have no strong demand to sell into in order to main their pace. The global economy is slowing so the month’s result really hangs its hat on the notion of quixotic forces rather than unexpected surging fundamentals. Indeed, it’s probably more likely that a Zombie will jump out of his grave undead than that EMU exports will maintain their strength.

Markets will puzzle over this number and it is a good number though surprising and beyond belief. The next question is about December and if December will prove to be an unwind of this spurt that brings the average back to earth as timing asymmetries settle back to normal or if some inexplicable bulge in activity will remain. But not get up false hopes on this report.

Euro-Area Trade trends for goods
  M/M% % SAAR
  Nov-11 Oct-11 Sep-11 3M 6M 12M
Balance*  € 6,100  € 500  € 2,500  € 3,033  € 267  € (932)
Exports
All Exp 3.9% -2.0% -1.2% 2.6% 4.1% 10.4%
Food and Drinks - -2.2% 0.3% -3.7% 4.4% 11.7%
Raw materials - -3.6% 1.1% 24.4% 14.2% 12.3%
MFG - -2.3% -2.3% -12.0% 0.5% 4.3%
Imports
All IMP 0.0% -0.7% -3.7% -16.3% -5.6% 3.4%
Food and Drinks - -2.5% -0.9% -2.3% -0.8% 8.1%
Raw materials - -4.8% -0.4% -29.0% -15.2% 7.2%
MFG - -1.8% -5.4% -22.6% -8.0% 0.4%
*Eur mlns; mo or period average; Gray shaded areas lag one month
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