German exports plunge in May, steepest drop in nine months

German exports fell unexpectedly in May, posting their steepest monthly drop in nine months, while imports rose less than expected, data showed on Friday, in a further sign that weak global demand is curbing growth in Europe’s largest economy.

The disappointing trade figures fleshed out a picture of economic weakness in Germany after data released earlier this week showed industrial output posted its biggest monthly drop in nearly two years and orders also came in weaker than expected.

"Another indicator signalling that Germany's performance is currently not champion-like," ING Bank economist Carsten Brzeski said, adding that the only region to which German companies had exported significantly more than last year was the euro zone.

He pointed out that the German trade surplus with the single currency bloc was widening again, suggesting that buoyant domestic demand in Germany was not necessarily benefiting the rest of the euro zone.

Overall, seasonally adjusted exports dropped 1.8 per cent on the month, data from the Federal Statistics Office showed. This was the biggest monthly fall since August 2015 and below the consensus forecast in a Reuters poll for a 0.25 percent rise.

Seasonally adjusted imports inched up 0.1 per cent on the month, the data showed, also disappointing market expectations for an increase of 0.4 per cent.

The plunge in exports narrowed the seasonally adjusted trade surplus to €22.2 billion from a revised €24.1 billion in April which was the highest monthly value so far.

“All May data point to a sharp slowdown of German industry,” Mr Brzeski said, adding that the loss of economic momentum was currently widely spread and had infected almost all global regions.

The overall weak global demand is hampering one of German exporters’ strengths, namely diversification in products and export markets, Mr Brzeski added.

Germany’s economy grew by 0.7 per cent in the first quarter, its strongest quarterly rate in two years, with soaring private consumption, higher construction investment and state spending on refugees more than offsetting a dip in foreign trade.

For the second quarter, analysts expect economic growth to slow drastically. Some economists say it could come to a near-halt and expand by just 0.1 percent.

Reuters