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Economy in Brief

German Trade Trends Show Ongoing Slowing and Shrinkage
by Robert Brusca  March 9, 2012

Trade flows typically grow faster than GDP. As world trade expands and the emphasis on reducing trade barriers has been a dominate theme, imports across most countries continue to rise relative to GDP.

A slowing in imports is an important cautionary sign for an economy. A decline is an even more cautionary signal. For Germany in January both exports and imports sprang to life with each flow growing by 2.4% (m/m). Still, this rise comes after a much larger drop reported for both in December. While German exports still have some life they are clearly slowing. German exports are up at a 1.7% pace over three-months, 3% pace over six-months and a 6.8% pace over 12-months. Exports grow but it is clearly a trend that is ratcheting lower.

For imports German growth rates are negative from six months and in. The three-month growth rate is at a -6.8% pace; over six-months German imports are falling at a 5.1% pace and over 12-months German imports still show growth of 4.5%. The trends here are clearly lower and are culminating in shrinkage. Apart from that there has been a shock to export and import growth rates as one year ago these puny single-digit Yr/Yr growth rates were closer to 30% for both exports and imports. That kind of deceleration can send a shock through the economy even though Yr/Yr nominal imports and exports are still growing.

One year ago the ratio of exports to imports was 120% two years ago it was 126% in January of 2012 it stands at 119%. But now imports seem to be losing their traction.

Data on real exports and imports lag by one month. Those trends show quite severely negative 3-month growth rates for both exports and imports and negative growth rates over six months with next-to-no growth year-over-year for both real exports and real imports.

The German trade surplus has moved up to its fourth strongest reading in the last 12 months. Even so it is the only the third strongest reading in the last five months. The trade balance is evolving in an environment of reduced trade. The story of falling German export orders is well known. The impact on the e-zone of the ongoing austerity programs means there will be continue to be a move to slower growth for trade. China today reported out reduced growth in output and in retail sales. The German trade results are showing faltering trends and these trends have very real and negative implications for the outlook for German GDP since Germany is a highly trade-dependent economy. Germans work first and consumer second; consumer spending will not be propping up growth in Germany anytime soon.

German Trade Trends for Goods
  M/M% %SAAR
  Jan-12 Dec-11 3M 6M 12M 12MPrev 2Yr Ago
Balance* € 14.20 € 13.91 € 14.40 € 14.11 € 13.17 € 12.80 € 11.61
Goods Exports 2.4% -4.5% 1.7% 3.0% 6.8% 29.6% 32.5%
Capital gds -1.7% -6.0% 1.3% 9.8% 15.3% -3.0%
Motor Vehicles -2.0% -6.2% 6.1% 10.1% 21.3% 7.4%
Consumer Gds -6.7% -20.8% -6.9% 3.5% 11.6% -10.2%
Goods Imports 2.4% -3.9% -6.8% -5.1% 4.5% 27.7% 27.2%
Capital goods   -4.5% -20.9% -8.1% 5.7% 22.7% -10.8%
Motor Vehicles   -4.2% 0.0% 0.0% 8.7% 24.1% 5.7%
Consumer goods   -2.1% -11.0% -5.0% 10.5% 12.2% -13.3%
Ratio X:M 119.1% 119.1% 116.5% 116.0% 120.4% 126.2% 116.8%
Real X -orders -5.5% 4.3% -31.7% -13.8% -7.1% 12.0% 42.7%
Real Exports   -5.3% -22.1% -8.3% -0.4% 11.8% 3.3%
Real Imports   -3.1% -16.6% -11.4% 0.5% 10.7% 0.0%
Real Ratio X:M   125.4% 125.4% 123.2% 126.6% 125.4% 121.4%
*Eur Blns; mo or period average; Shaded area trends lag one Mo
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