German Exports Log Marginal Growth; Private Sector Shrinks

Germany’s exports registered a marginal growth in June as global demand remained weak and imports declined the most in three months, official data revealed Thursday.

Elsewhere, the Purchasing Managers’ survey showed that the private sector contracted in July, after expanding for five straight months, on steeper decline in manufacturing activity.

Exports edged up 0.1 percent in June, the same rate of increase as seen in May, Destatis reported. Moreover, this was weaker than economists’ forecast of 0.3 percent gain.

Meanwhile, imports declined 3.4 percent, reversing a 1.4 percent rise in May. The fall was much bigger than the 0.3 percent slump economists had expected.

Driven by the fall in imports, the trade surplus rose to EUR 18.7 billion from EUR 14.6 billion in the previous month. This was also above economists’ forecast of EUR 15 billion.

On a yearly basis, exports rebounded 1.5 percent in June after a 3.5 percent fall in May. At the same time, imports decreased 9.5 percent following a 10.2 percent drop in May.

Data showed that exports to the U.S. and China fell 0.2 percent and 5.9 percent, respectively. Meanwhile, imports from China grew 5.3 percent and that from the U.S. slid 1.2 percent.

ING economist Carsten Brzeski said the latest export numbers also confirm the picture painted by the initial GDP estimate released last week that the Germany economy remains stuck in stagnation.

“…trade is no longer the strong resilient growth driver of the German economy that it used to be, but rather a drag,” Brzeski added.

In the latest World Economic Outlook, the International Monetary Fund projected the German economy to shrink 0.3 percent this year before rebounding 1.3 percent in 2024.

The PMI survey showed that Germany’s private sector moved back into the contraction territory in July due to a slower growth in services activity and a deeper fall in manufacturing output.

The S&P Global/HCOB final composite output index registered 48.5 in July, down from 50.6 in June. A score below 50.0 indicates contraction.

The service sector grew at the weakest pace since February. The services PMI dropped to 52.3 from 54.1 a month ago. But the reading was above the initial estimate of 52.0.

The PMI survey showed that there was a general weakening of demand for goods and services in July. New business from abroad also declined. Expectations among companies turned pessimistic.

Employment growth came close to a stall. On price front, the survey revealed that input cost inflation and output charge inflation slowed in July.

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