Weakness in EU weighing on German exports
More evidence of sliding German exports and industry orders yesterday compounded concerns that the euro zone crisis may have battered the region’s largest economy into contraction at the end of last year.
It comes as the latest figures on unemployment in the 17-nation region showed a rise to 11.8 per cent from 11.7 percent in October. That is the highest since the data series started in 1995.
German imports and exports slid in November, narrowing the trade surplus, and industry orders fell more than expected.
Imports slid 3.7 per cent, while exports fell 3.4 per cent, data from the Federal Statistics Office showed. Seasonally-adjusted industrial orders fell 1.8 per cent in November due mainly to a sharp fall in demand from non-euro zone countries.
Germany has served as a pillar of regional strength through the three-year euro zone debt crisis but the economy slowed in the third quarter of last year and economists expect it to have contracted in the last quarter. Although many see Germany escaping a recession and staging a steady improvement this year, yesterday’s data prompted some economists to predict a bumpy road.
“With a pick-up of global demand, exports could quickly return as the reliable growth driver. However, latest new order data illustrate that the way out of contraction will not necessarily be a straight upward-sloped line,” said Carsten Brzeski, senior economist at ING.
Germany is unlikely to join euro zone stragglers, he added, but “could end up humming the ‘things will get worse before they get better’ tune still for some time.”
The seasonally-adjusted trade surplus narrowed more than expected to €14.6 billion from a downwardly revised €14.9 billion in October.
Weakness in the European Union, where Germany sells roughly 60 per cent of its exported goods, is weighing on exports.
Nonetheless, unemployment is close to a 20-year low and wages are rising for the first time in years. Purchasing managers’ reports showed the private sector expanded for the first time in eight months in December, while the Ifo index showed morale at German businesses rising in November and December. – (Reuters)