German trade increases in May


German trade with the rest of the world surged in May in part due to companies seeking to make up for transport delays caused by a volcanic ash cloud in April.

The trade surplus for Europe's largest economy unexpectedly shrank because of a record increase in imports, though exports also leapt after a marked decline in April, preliminary figures from the Federal Statistics Office showed today.

Imports climbed 14.8 per cent on the month in seasonally adjusted terms, the biggest increase since German reunification in 1990, the Office said. The imports were worth €70.3 billion, the largest sum on record, Bundesbank data showed.

Exports climbed by 9.2 per cent from April to €80.8 billion. Overall, Germany's adjusted trade surplus narrowed to €10.6 billion in May from a revised €12.8 billion in April. A surplus of €13.5 billion had been forecast.

"The demand is very strong for German goods, especially from developing nations like China," said Juergen Michels, an economist for Citigroup in London.

"The weaker euro is starting to have an effect as well. The German economy will likely have expanded by 1 per cent in the second quarter," he said. 

"A reason for (the latest data) could be the catch-up effect from the ash cloud in April that brought air transport to a virtual standstill for a while. A lot of that was compensated for in May," Mr Michels added.

Air transport was seriously affected in much of Europe in April by the ash cloud sent up by the eruption of Icelandic volcano Eyjafjallajokull.

Germany emerged from its deepest post-war recession in the second quarter of 2009. The recovery has picked up over the past few months yet doubts linger over what may lie further down the road, particularly given the euro zone debt crisis.

A key survey last week showed that the manufacturing sector expanded for a ninth month running in June, growing at the same pace as in May despite signs austerity measures abroad may be slowing demand.

However, industrial orders unexpectedly fell slightly in May due to a dip in big ticket items, data showed yesterday.

The latest trade figures also helped to shrink Germany's unadjusted current account surplus to €2.2 billion.