Strong euro continues to hit German exports

German exports continue to suffer as a result of the global economic slump and the strong euro, according to data released yesterday.

Germany's Federal Statistics Office said that exports in June were down 4.1 per cent compared to the same time last year. Goods worth more than €54 million remained in German warehouses last month as a result of a 2.5 per cent decline between May and June.

Exports to other European Union countries were particularly hard hit, declining by 5.5 percent compared to June of last year, to €29.7 billion.

"The minus was not so much of a surprise after the rise in the previous month," said Mr Thomas Hueck, an economist with Germany's HypoVereinsbank, adding that a recovery would be essential to drag the German economy out of its three-year economic slump.

"It shows that if exports aren't doing well, then the German economy doesn't do well."

Germany's car manufacturers had reason for cheer, however, as the data showed that the all-important car industry bounced back in July.

Orders for German cars jumped by 2 per cent to 288,000 vehicles last month, a 2 per cent increase on last year and the best July result in four years. The export market grew by 7 per cent, in stark contrast to the slump in the rest of Germany's export market.

The German cabinet is expected to approve a €15 billion tax cut tomorrow in an attempt to stimulate the economy.

On Thursday, the government will publish its second-quarter gross domestic product (GDP) data. A Bloomberg survey of economists published yesterday suggests that Germany, the largest economy in the euro zone, contracted in the second quarter

The €7 trillion economy stagnated from April to June after growth of 0.1 per cent in the first quartile, according to the survey of 18 economists.

The European Commission will publish forecasts for the third and fourth quarters on Thursday. It predicted growth of between zero and 0.4 per cent in both the second and third quarters in its last forecast.

Surveys released last week showed increased optimism among German business leaders and consumers, with consumer confidence rising for the fifth time in as many months.