German Trade Surplus Widens in November on Sliding Imports

It is a busy day on the economic calendar. German trade data drew interest this morning. Following a less marked contraction in the German manufacturing sector, a fall in the German unemployment rate, and better-than-expected German service PMI numbers, investors hoped for a material improvement in trade terms.

In November, Germany’s trade surplus widened €6.9 billion to €10.8 billion versus a forecasted €7.5 billion. Exports slipped by 0.3%, while imports tumbled by 3.3%.

According to Destatis,

• Germany exported goods to the value of €135.1 billion and imported goods to the value of €124.4 billion in November.

Trade with EU countries

• Germany exported goods to the value of €73.0 billion to EU Member States in November while importing goods to the value of €61.0 billion.
• Compared with October 2022, exports to the EU fell by 0.4%, with imports down 5.8%.
• Exports to euro area countries declined by 0.7%, with imports from euro area countries down 6.5%.

Trade with non-EU countries

• Exports of goods to countries outside the EU fell by 0.1%, with imports declining by 0.8%.
• The United States was the largest importer of German goods in November.
• Exports to China fell by 1.5%, while exports to the UK increased by 16.1%.

While the trade surplus widened, a sharp fall in demand will be of concern. However, the German manufacturing sector saw a less severe contraction in December than in November, suggesting the December report will reflect improving trade terms.

EUR/USD Price Action

Ahead of today’s trade data, the EUR/USD slipped to an early low of $1.06011 before rising to a high of $1.06316.

However, responding to the German trade data, the EUR/USD fell to a post-stat low of $1.06016 before rising to a post-stat high of $1.06096.

At the time of writing, the EUR was up 0.01% to $1.06053.

Next Up

Later in the European session, prelim inflation figures from Italy and Eurozone wholesale inflation figures will also influence. The markets are closely watching inflation. With France and Germany reporting softer inflation numbers, a similar trend in Italy and wholesale inflation would be another boost for the euro area economy.

However, no ECB members are speaking today, leaving investors to consider what the latest round of stats means for the ECB.

With the hawkish FOMC meeting minutes resonating from overnight, the US economic calendar will likely have more influence today.

ADP nonfarm employment change and weekly jobless claims will move the dial early in the US session. Finalized Markit-survey service and composite PMIs are also due out, with revisions to the services PMI likely to have an impact.

Investors should also look out for any FOMC member commentary. FOMC members Bostic and Bullard are slated to speak today. We expect any monetary policy references to influence.