Eurozone weakness drags on German exports

(BERLIN) - German exports fell at a sharper rate than expected in May as weakness in several key markets including the eurozone choked sales, official figures showed on Monday.

Excluding adjustments for seasonal factors, Europe's top economy reported a trade surplus of 13.1 billion euros ($16.8 billion) in May.

This was sharply lower than the 17.6 billion euros forecast by analysts polled by Dow Jones Newswires.

Exports, the traditional driver of German economic growth, dropped to 88.2 billion euros versus 94.3 billion euros the previous month, the federal statistics office reported, citing the steepest month-on-month drop since December 2011.

Imports also sank but at a lower rate, to 75.2 billion euros from 76.4 billion euros in April.

In a year-on-year comparison, exports declined 4.8 percent and imports 2.6 percent.

Figures adjusted for seasonal factors showed that the trade surplus fell to 14.1 billion euros from 17.5 billion euros in April.

But imports saw a slight rise of 1.7 percent to 76.3 billion euros while exports dropped 2.4 percent to 90.4 billion euros.

An economist with Newedge Strategy, Annalisa Piazza, blamed the weak figures on slack demand from ailing European partners and Asia.

"Recent surveys showed some stabilisation in the eurozone trade activity but today's figures failed to show further consolidation as the state of the EMU (eurozone) economy remains extremely sluggish and demand from Asia is unlikely to have accelerated," she said.

Christian Schulz at Berenberg Bank said that the May trade data spotlighted broad trends in the German economy but gave an upbeat outlook.

"Robust domestic demand pushes up imports, while weakness in several export markets holds back export growth," he said.

"But with US demand growing nicely, reinforced by the strong dollar, and the eurozone gradually emerging from recession, the outlook for German exporters could brighten again in the second half of the year, despite the emerging market wobbles."

Carsten Brzeski of ING-DiBa Bank said the figures underlined Germany's growing dependence on markets outside the eurozone.

"All in all, today's disappointing trade data show that the eurozone's economic engine is still stuttering," he said.

"After a strong start to the second quarter, May data have been rather disappointing. Nevertheless, we still think that at the end of a weather and holiday driven rollercoaster ride, the German economy should finally return to full strength in June."