German exports posted their biggest drop in a year in January, throwing the economy's main growth engine into reverse at the start of 2010, but a surge in orders suggests the decline will be temporary.
Adjusted for seasonal swings, German exports fell by 6.3 per cent on the month to €67.9 billion, with imports rising by 6.0 per cent to €59.2 billion, the Federal Statistics Office said today.
This yielded a trade surplus with the rest of the world of €8.7 billion in January, down from €16.6 billion in December. A reading of €16.0 billion had been forecast.
The slump in exports, which compared with a consensus forecast for a rise of 0.8 per cent, shocked analysts. The Office gave no reason for the drop though some analysts said harsh winter weather may have had an impact.
"The number is a disaster. This suggests that trade will not contribute to growth," said Commerzbank's Simon Junker. "Nevertheless, we are still of the opinion that the first half will be strong, although perhaps not necessarily the first quarter.
"We assume that exports will resume growing in the next few months."
Mr Junker said the rise in imports, which had been expected to grow by 1.2 per cent on the month, was the only bright spot in the data release because it pointed to firm domestic demand.
The German economy - Europe's largest - emerged from its deepest post-war recession in the second quarter of last year before stalling in the final three months of 2009.
However, a purchasing managers' survey released last week showed German manufacturing activity expanded in February at its fastest rate since June 2007, boosted by a rise in new orders.
"The strong increase in new orders bodes well for the coming months," said ING Financial Markets' Carsten Brzeski. "The export structure, both in terms of destinations and product specialisation, should continue to make the German export sector a beneficiary of the ongoing global recovery."
Reuters