German imports surged at their fastest pace in over three years in June, suggesting domestic demand in Europe’s largest economy remains strong in the face of political crises abroad.
Data from the Federal Statistics Office showed seasonally adjusted imports rose by 4.5 per cent on the month, rebounding from a sharp fall in May. It was the strongest month-on-month increase since November 2010.
Exports rose by 0.9 per cent.
“The rebound in imports shows there is some resilience in domestic demand and exports were stable - the big crash that some had been forecasting has not happened yet so there is more to German exports than only Russia,” said Carsten Brzeski, senior economist at ING.
Yesterday, Russia announced a ban on many Western food imports in response to economic sanctions unveiled by the United States and Europe over Moscow’s support for rebels in eastern Ukraine. Russian exports, which make up around 3.3 per cent of total German exports, fell by 15 per cent in the first five months of 2014 compared with the same period last year, according to Germany’s Chamber of Industry and Commerce (DIHK).
But Mr Brzeski said foreign trade could prop up the economy during the April-June period. “If you look at the entire quarter, it seems as if net exports were up quarter on quarter, meaning that this is probably the only growth driver that the German economy had in the second quarter,” he said.
Aa growing chorus of economists is now predicting that the economy could actually contract on the quarter for the first time since late 2012.
Other data this week has disappointed, with industrial orders suffering their sharpest fall in nearly three years due to weak euro zone demand and below-average bulk orders, and output undershooting forecasts with only a modest rise. Some German firms have complained of weak overseas demand recently. Beiersdorf, makers of Nivea skin cream, said on Thursday that growth in emerging markets was stuttering. Truck maker MAN has pointed to falling orders in major South American markets.
Germany’s trade surplus narrowed to €16.2 billion from €18.8 billion the previous month. A breakdown of unadjusted data showed exports to the euro zone climbed by 0.3 per cent in June compared to the same period last year, while exports to countries outside of Europe were down 0.9 per cent.