German trade surplus narrows as industrial motor sputters
German imports grew far faster than exports in July, narrowing the trade surplus and suggesting Europe's largest economy will again rely on domestic demand to drive growth in the third quarter as a stronger euro acts as a headwind for exporters.
Seasonally adjusted exports rose by 0.2 percent on the month while imports were up 2.2 percent, data from the Federal Statistics Office released on Friday showed. Both figures came in weaker than expected.
The seasonally adjusted trade surplus narrowed to 19.5 billion euros ($23.55 billion) from 21.2 billion euros in June. The July reading was lower than the Reuters consensus forecast of 20.3 billion euros.
The trade figures came after data released on Wednesday showed industrial orders fell in July on feeble domestic demand while appetite from abroad was flat - a rare sign of weakness in the economy less than three weeks before federal elections.
But Carsten Brzeski, economist at ING, said the German economy's was still in good shape.
“Even though this week's industrial data was anything but splendid, strong fundamentals combined with buoyant confidence indicators still point to a quick rebound of industrial activity after the summer break,” he said.
“The upside of the weak start to the third quarter is that the upside potential has clearly increased.”
German business morale fell in August, though by less than expected, after climbing to three record highs in a row, suggesting that a consumption-led upswing in Germany will continue despite concern about a car emissions scandal.
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