German Exports March 2008

Exports from Germany fell for the second consecutive month in March as the global slowdown and rise of the euro continued to weigh on orders. Sales abroad, adjusted for working days and seasonal changes, declined 0.5 percent from February, when they when they were down 0.2 percent, the Federal Statistics Office said today. The rate of increase in Gernam exports has now been slowing steadily since the last quarter of 2006.




The trade surplus narrowed to 16.7 billion euros ($26 billion) from 16.9 billion euros in February. The surplus in the current account, which gives perhaps the best measure of all exports including services, widened to 17.2 billion euros from 16.1 billion euros the previous month.


The German economy is expected by Germany's leading economic institutes to expand 1.8 percent this year and 1.4 percent in 2009, but these numbers are now looking very questionable, given the extent to which German GDP growth is dependent on exports. These forecasts are already a downward revision since they had previously forecast growth of 2.2 percent for this year. The global outlook is certainly not encouraging for the idea of a sudden "bounce back" in German exports and International Monetary Fund last month cut its 2008 global growth forecast and said the world economy faces a 25 percent chance of recession.



The euro has appreciated 14 percent appreciation against the dollar over the past year and reached a record $1.60 on April 22. At the same time, surging raw-material costs are eroding spending power. Crude oil prices have doubled in the past year and breached $120 a barrel for the first time this week.



German manufacturing growth also slowed last month, business confidence fell and factory orders dropped for a fourth month in March. Investors also became more pessimistic in April. Plant and machinery orders fell 5 percent in March from a year earlier, according to the VDMA machine makers association.

German industrial production declined 0.5 percent in March from February, when it rose a revised 0.2 percent, according to the Economy Ministry earlier today.

German exports to other European Union countries dropped 1.5 percent in March from a year earlier, they rose 3.5 percent to non EU countries (including, of course, Russia and Ukraine).



Germany exported goods to the value of EUR 84.0 billion and imported goods to the value of EUR 67.3 billion in March 2008. German exports of March 2008 were thus 0.2% and imports 3.3% above the respective March 2007 levels. Upon calendar and seasonal adjustment, exports and imports showed opposite month-on-month trends: Exports decreased by 0.5%, while imports increased by 0.8% on February 2008.

The foreign trade balance showed a surplus of EUR 16.7 billion in March 2008. In March 2007, the surplus amounted to EUR 18.7 billion. Upon calendar and seasonal adjustment, the foreign trade balance recorded a surplus of EUR 15.4 billion in March 2008.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 17.2 billion in March 2008, which included the balance of services (EUR –0.7 billion), factor income (net) (EUR +5.0 billion), current transfers (EUR –3.1 billion) and supplementary trade items (EUR –0.7 billion). In March 2007, the German current account showed a surplus of EUR 20.7 billion.

In March 2008, Germany dispatched commodities to the value of EUR 54.8 billion to the Member States of the European Union, while it received commodities to the value of EUR 44.1 billion from those countries. Compared with March 2007, dispatches to the EU countries thus decreased by 1.5%, while arrivals from those countries rose by 1.8%. Commodities to the value of EUR 36.3 billion (–2.7%) were dispatched to the euro area countries in March 2008, while the value of commodities received from those countries was EUR 30.4 billion (+0.2%). Commodities to the value of EUR 18.5 billion (+0.8%) were dispatched to EU countries not belonging to the euro area in March 2008, while the value of the commodities which arrived from those countries was EUR 13.7 billion (+5.5%).

Germany exported commodities to the value of EUR 29.2 billion to and imported commodities to the value of EUR 23.2 billion from countries outside the European Union (third countries) in March 2008. Compared with March 2007, exports to third countries were up by 3.5% and imports from those countries by 6.3%.

Germany Services PMI April 2008

Eurozone service sector growth held steady at a slightly slower pace in April as faster growth in Germany contrasted with weakness elsewhere; Spain in particular stood out and reported record job cuts.

The RBS/NTC Eurozone Services Business Activity Index rose from 51.6 in March to 52.0 in April, coming in slightly above the earlier flash estimate of 51.8. However, the rise still indicated only a very modest acceleration in growth, with the rate of increase remaining weak by historical standards of the survey (and only slightly above the average reading for Q1, which had been the weakest quarter since Q2 2003).

Germany

Germany's services sector expanded for the third month running in April and at its fastest pace in six months, buoyed by a marked upturn in new business growth, The NTC services PMI survey showed on Tuesday.

NTC Research's business activity gauge for German firms ranging from banks to catering rose to 54.9 from 51.8, holding above the 50 mark separating expansion and contraction for the third month running and hitting its highest level in six months.
Even so, firms were less upbeat about the corporate outlook. Business expectations remained in the 'expansion' zone, but stayed well below the long-run series average, registering 51.2.

"The business expectations index ... does suggest that firms are very cautious," said Chris Williamson, chief economist at NTC, which compiles the data.
Anecdotal evidence suggested that a weaker economic outlook for the next 12 months weighed on business sentiment, NTC said.

The German government expects economic growth to slow to around 1.7 percent in 2008 from 2.5 percent last year. Next year it has forecast expansion of some 1.2 percent.
Although economic indicators point to the German economy, Europe's largest, making a strong start to this year, it has not escaped the fallout from the global credit crisis.

While a new business index rose sharply to 55.6 in April from 52.1 in March, the financial intermediation sector was the only one of six broad areas of the services economy where new business did not grow in April, NTC said.

An index on input prices rose to 62.7 from 60.3 in March. That reading was the highest this year and only just below last December's seven-year high.

EU Economic Sentiment Index April 2008

The European Commission’s eurozone “economic sentiment” index which fell sharply from 99.6 in March to 97.1 in April – the lowest level since August 2005. With the indicator regarded as good guide to growth trends, the unexpectedly steep decline pointed to a marked deceleration in economic activity.

Still, eurozone countries show varying performances. Economic sentiment in Spain, which is at risk of a serious house price correction, has fallen to the lowest level since late 1993. But sentiment in Germany and France remains relatively robust – falling to the lowest levels since February 2006 and December 2005 respectively.




As can be seen from the above chart, Italy continues - like Venice - its steady downward drift, while the two eurozone economies which had the strongest housing booms head steadilyoff the cliff, with Spain having poll position, and by quite a long margin