German exports declined more than expected in July as the slowdown in Europe's other economies curbed demand for German products. Sales abroad, when adjusted for working days and seasonal factors, fell 1.7 percent from June, according to data out today from the Federal Statistics Office. Year on year, exports rose 7 percent, but imports rose 7.4% from June and were up by an annual 15.7% - remember, July was the month of record oil prices - and hence the net effect of trade on GDP in July will be significantly reduced.
German exporters are grappling with a slowdown in the economies of their main trading partners. Europe's gross domestic product shrank 0.2 percent in the second quarter and may not recover in the third, raising the risk of the first zone-wide recession since EMU was launched in 1999. Exports to the all important eurozone - which totalled 35.9 billion euros - were up 4.1% on the year. While oil prices have now fall 28 percent from the July record, they're still up almost 40 percent over the past year, although if the downward movement continues we may well see year on year negative movements in oil prices in two months or so.
As a result of the surge in imports the trade surplus narrowed to 13.9 billion euros ($20 billion) from 19.9 billion euros in June. The surplus in the current account, the measure of all exports including services, also narrowed - to 11.8 billion euros from 18.9 billion euros in June.
German factory orders continued to fall in July, extending their longest-ever declining streak and offering yet another indication that the economy may well be heading for a recession. The VDMA employers association said that plant and machine orders dropped for a third straight month in July, led by sliding foreign demand.
German business confidence declined to a three-year low last month and consumer optimism fell to the lowest level in five years.
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