Euro zone’s largest economy also sees manufacturing turnover fall 1.9 percent in May, reports Team IFM
Wiesbaden, July 14: Germany saw both exports and imports falling in May compared to the preceding month, with the turnover of the manufacturing sector too taking a tumble, official data released on Tuesday showed, reflecting a slowdown and endorsing earlier warnings by independent analysts that business confidence was dipping.
“After calendar and seasonal adjustment, exports decreased by 1.1 percent and imports by 3.4 percent compared with April,” said Destatis, the federal statistical office. “This was the highest month-on-month decrease in imports since November 2012.”
The overall trade surplus however widened, as imports fell faster than exports. In seasonally adjusted terms, Germany exported goods worth a total of 92.8 billion euros ($126 billion), as compared to imports of 74.1 billion euros.
Economists polled by The Wall Street Journal had forecast a surplus of 16.2 billion euros.
Alongside, Destatis also said that on the basis of provisional data, the manufacturing sector of Germany, the Euro zone’s largest economy, saw turnover fall in real terms by 1.9 percent in the month under review, as compared to April.
This is in line with an earlier statement by Destatis, saying Germany saw its industrial production nosedive at its quickest clip in two years in May, challenging government claims that the economy was on the path of recovery and bolstering the view of sceptics that this wasn’t so.
Destatis released its first quarter GDP assessment report on May 23, and claimed that “the German economy is gaining momentum,” and maintained that one of the reasons for the “strong growth at the beginning of the year” was the extremely mild weather.
The statistical office said its finding was consistent with its May 15 preliminary report that put the first quarter GDP nosing up 0.8 percent upon seasonal adjustments, compared with the October-December period of 2013.
“The last time GDP grew more in a quarter-on-quarter comparison was three years ago,” the statistical office said. “The moderate growth path of last year (of 0.4 percent in the last quarter of 2013) thus has accelerated.”
However that very day, one of Germany’s largest economic think-tanks, the Munich -based Ifo Institute for Economic Research, said German business confidence had dipped in May.
The closely watched survey report, released a few hours after Destatis announced its first quarter data, said German companies were less optimistic about both their current situation and the outlook for the next six months.
“Assessments of the current business situation were no longer as favourable as in April,” said Hans-Werner Sinn, president of Ifo Institute, in a statement. “A lull was seen in the German economy in May,” Sinn said.
MIXED SHOW
In its latest statement, Destatis tried to downplay Germany’s falling exports, saying May shipments increased by 4.3 percent compared to the year-ago period, while imports decreased by 0.4 percent.
In absolute terms, it exported goods to the value of 92.0 billion euros and imported to the value of 74.3 billion euros.
At the same time, the federal statistical office said that on the basis of provisional data, the manufacturing sector turnover fell in real terms by 1.9 percent compared with April.
“Domestic turnover decreased by 3.4 percent, the business with foreign customers declined 0.4 percent,” the Destatis statement said. “Sales to Euro area countries were 2.3 percent below preceding month’s level while sales to other countries went up 0.8 percent.”
The year-on-year scenario was better, its data showed. Compared with the preceding year, real turnover in manufacturing showed a total increase of 1.4 percent in May after having been adjusted for working-day variations.
Increases were observed in domestic sales – up 0.1 percent, while turnover from business with foreign customers rose by 2.8 percent. Among foreign transactions, sales to Euro area countries increased by 2.9% while turnover with other foreign countries ascended 2.8%.
Similarly, cumulated from January to May 2014, the (working-day adjusted) turnover in manufacturing was 3.4 percent above the level of the same period of the previous year; domestic turnover rose 2.6 percent and foreign turnover increased 4.2 percent.
After calendar and seasonal adjustment, exports decreased by 1.1 percent and imports by 3.4 percent compared with April 2014. This was the highest month-on-month decrease in imports since November 2012.
The foreign trade balance showed a surplus of 17.8 billion euros in May 2014. In May 2013, the surplus amounted to 13.6 billion euros. In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of 18.8 billion euros in May 2014.
According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of 13.2 billion euros, which takes into account the balances of trade in goods, including supplementary trade items (up 19.2 billion euros), services (down 2.6 billion euros), factor income net (down 2 billion euros) and secondary income (down 1.3 billion euros).
In May 2013, the German current account showed a surplus of 12.8 billion euros.
Germany dispatched goods valued at 53.1 billion euros to various European Union (EU) members while it received goods valued at 48.5 billion euros from those countries. Compared with May 2013, dispatches to EU countries increased by 6.1 percent.
Exports of goods to countries outside the EU or “third countries” amounted to 38.9 billion euros in the month under review – registering an increase of 2.1 percent, while imports from those countries totaled 25.8 billion euros – a decrease of 0.8 percent.
EARLY WARNINGS
May’s Ifo report, based on monthly responses from about 7,000 companies, painted a slightly less upbeat picture of the German economic scenario than that of the Destatis assessment, saying its Business Climate Index for industry and trade had slipped to 110.4 points in May from 111.2 points in April. In short, German businesses were an unsure lot in May.
According to Ifo president Sinn, a lull was seen in the German economy in the month under review. “Companies are also less optimistic about future business developments,” he said in the institute’s statement.
The statement also said the business climate index fell slightly, but was still at a “high level” in the manufacturing sector.
In wholesaling, however, the business climate index fell markedly after April’s sharp increase, Ifo said. Assessments of the current business situation were “clearly less favourable” while that of the business outlook deteriorated “only marginally”.
“Although assessments of the current business situation improved marginally, manufacturers are slightly less optimistic about future business developments,” Sinn said. “Manufacturers continue to expect stronger impulses from exports.”