Euro zone exports fell sharply in August from the previous month and imports eased too, data showed today, signalling weakness in global and internal demand and raising concern about the region's recovery prospects.
Exports from the 16 countries using the euro fell 5.8 per cent in August compared with July and imports eased 1.3 per cent, seasonally adjusted data from the European Union's statistics office showed.
This reduced the seasonally adjusted trade surplus to €1 billion in August from €6 billion in July.
Trade data volatility meant too much importance should not be attributed to one month's data, said Howard Archer, economist at IHS Global Insight.
"Nevertheless, it is worrying for euro zone recovery prospects to see that seasonally adjusted exports plunged by as much as 5.8 per cent month-on-month in August, which more than wiped out the gains of the previous two months," he said.
Meanwhile the fall in imports "hardly points to marked improvement in domestic demand", he added.
Economists think the euro zone economy returned to growth in the third quarter and expect it to continue to expand, albeit slowly in the coming quarters.
"The recent improvement in ... global prospects, particularly in the United States and Asia, suggests that export growth will pick up next year," said Ben May, economist at Capital Economics.
"But it will be a long while before it returns to the robust rates seen two or three years ago, particularly if the euro continues its recent upward trend," he said.
The euro is at 14-month highs against the dollar and euro zone officials have said any further sharp rise could cause concern.
European exporters say the pain threshold for them is an exchange rate above $1.40. The euro was trading around $1.49 today.
Euro zone finance ministers will discuss exchange rates when they meet on Monday in Luxembourg. Economists say, however, that while the euro's level is important for trade, the strength of demand plays a bigger role in shaping export and import trends.
Without the seasonal adjustment the data looked even more grim. The euro zone swung to a trade deficit in August against market expectations of a surplus even though non-adjusted exports fell less than imports year-on-year.
The trade gap was €4 billion in August, compared with a €12.3 billion surplus in July and a deficit of €11.3 billion a year earlier. Economists polled by Reuters had expected a surplus of €9.7 billion for August.
Eurostat said non-adjusted exports fell 23 per cent year-on-year to €89.7 billion while imports tumbled 27 per cent to €93.7 billion.
Detailed information for August was not available, but data showed the euro zone's trade deficit in raw materials halved to €11.2 billion in January-July. The trade gap in energy shrank to €114.5 billion from €194.6 billion a year earlier.
The trade surplus in exported machinery and vehicles fell to €70.5 billion from €116.1 billion in the same period of 2008.
Reuters