THE TAKEAWAY: German exports down 1.7%, trade balance down to 14.4 billion -> Exports to EU drop 1.1% while non-European exports see 10.3% gain -> Euro falls for a second day
German exports fell 1.7% during April, leading to a lower trade balance of 14.4 billion Euros, down from March’s 17.4 billion balance. Although exports fell more than the expected 0.7%, the trade balance was higher than expected as imports surprised analysts by falling 4.8% during the month.
German exports totaled 87.1 billion Euros, while imports equaled 72.7 billion in April, according to the Federal Statistics Office. 40.6 billion of April’s exports were sent to member countries of the European Union, indicating a 1.1% drop of import and exports with Germany’s neighbors when compared to April 2011. Meanwhile, exports to countries outside the EU increased 10.3% compared to last year. The smaller trade balance is the result of the European debt crisis and Germany has begun to feel the effects of its neighbors’ contracting economies.
In a press conference yesterday, German Chancellor Angela Merkel said she is ready to use all current Euro tools to help stabilize the Eurozone. However, she still opposes debt sharing and allowing Spanish banks direct access to bailout funds. A G20 meeting later this month will see leaders discussing solutions to the crisis.
EUR/USD continued earlier session losses on news of the weak German exports. The pair is dropping for a second day, as gains from earlier this week are reversed.