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Defying trade woes, German exports jump in September

Defying trade woes, German exports jump in September

FRANKFURT AM MAIN, Nov 8: German exports jumped higher than expected in September, outpacing imports to widen the country’s trade surplus in defiance of ongoing trade tensions and Brexit woes, reports AFP. The trade surplus in Europe’s biggest economy grew to 19.2 billion euros ($21.2 billion) in September, up from 18.1 billion in August, the federal statistics office Destatis said in data adjusted for seasonal swings. The “unexpected rebound in exports” at a time of slowing global growth and weak manufacturing data leaves observers “scratching their heads”, said ING Diba bank analyst Carsten Brzeski. Some 114.2 billion euros of German goods were sold abroad in September, up 1.5 percent on the month before and a whopping 4.6 percent year-on-year, Destatis said. Imports meanwhile climbed at a slightly slower pace to hit 93 billion euros, 1.3 percent higher month-on-month and an increase of 2.3 percent on the year. Demand for “made in Germany” goods was driven by non-eurozone EU countries, with exports to the region rising seven percent. The foreign trade data provided some relief for a country teetering on the brink of a recession after the German economy shrank by 0.1 percent in the second quarter. Third-quarter figures are due on November 14. “With today’s data, a technical recession is not yet a done deal,” Brzeski said, referring to two consecutive quarters of contraction. But analyst Jens-Oliver Niklasch of LBBW cautioned against reading too much into the figures, saying September’s trade data could be an anomaly. Looking at the first nine months of the year, he noted that exports to non-eurozone countries had actually fallen by 0.4 percent. “That’s probably the Brexit effect,” he said, warning of further strain as the uncertainty surrounding Britain’s departure from the bloc drags on. And although global trade conflicts have eased somewhat with hopes of a breakthrough in US-China talks, the risks “have not yet disappeared”, he added. Germany’s export-oriented companies are particularly vulnerable to global trade upsets, and its automotive and industrial sectors have been hard hit in recent months. Another report adds; German industrial production slumped in September, official data showed Thursday, dashing hopes of a quick rebound and adding to the gloom over Europe’s powerhouse economy. Industrial output dropped by 0.6 percent month-on-month, federal statistics authority Destatis said, wiping out August’s gain of 0.4 percent. Analysts surveyed by Factset had expected a smaller dip of 0.4 percent in September. Manufacturing firms fared worst, seeing a drop of 1.3 percent, in the latest sign of weakness among Germany’s export-oriented companies. The figures come a day after a surprise jump in German industrial orders offered a glimmer of hope in a country that is only narrowly expected to avoid tipping into recession this year. “Today’s industrial production data shows that any optimism on the outlook for German industry is premature,” said ING Diba bank analyst Carsten Brzeski. “Even in case of some easing of the current trade conflicts and an end to the Brexit uncertainty, it will probably take until the first quarter of next year to see a significant rebound of German industry.” The only bright spot in the data came from a strong rebound in the construction sector where output was up 1.8 percent. “So far, we only know that industry is in recession but not necessarily the entire economy,” Brzeski said. “As so often, it will be the export sector, which decides on the fate of the German economy in the third quarter. Stay tuned.” Germany’s economy shrank by 0.1 percent in the second quarter, with third quarter figures due on November 14. The government expects just 0.5 percent growth for 2019.

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