Exports to the rescue: Trade data helps allay fears of German slump

Berlin (dpa) – A surprise jump in German exports in October could help Europe’s biggest economy to escape a slump in the run up to the end of year despite the bitter US-China trade war and a slew of global economic concerns.

German exports rose by a solid 1.2 per cent in October from a 1.5-per-cent gain in September. Analysts had expected October exports to slump by 0.3 per cent.

The second consecutive monthly rise in exports helped to allay fears that the country could face a fourth-quarter downturn in the wake of a contraction in the nation’s key manufacturing sector and soft private consumption data.

But analysts warned that Germany’s economic prospects were overshadowed by the protracted US-China trade war, the uncertainty unleashed by Britain’s Brexit crisis and the shake-out underway in the German car industry as it battles to adjust new environmental demands.

“With disappointing consumption and industrial data but encouraging trade data, the economy will remain on a windy road between contraction, stagnation and meagre growth,” said ING Bank economist Carsten Brzeski.

Indeed, the gain in exports was one of the few bright spots for Germany’s export-driven economy.

The trade figures also represented the last batch of hard German economic data for the first month of the fourth quarter of 2019 with the statistics raising worries that the slump in the industrial sector could threaten the nation’s strong labour market and undercut household spending.

Monday’s trade data showed imports stagnating in October and a widening in the nation’s trade surplus to 21.5 billion euros, consequently opening up Berlin to renewed calls for it to launch a new domestic stimulus measures to boost domestic growth.

Retailers have also been cautiously optimistic about their all-important Christmas sales after signs of record online business this year and a pick up in consumer confidence.

The German job market has also been holding up, with the unemployment rate coming in unchanged at near a record low of 5 per cent in November after jobless claims posted a modest drop.

But monthly retail sales plunged by 1.9 per cent in October, well below forecasts for a modest gain, Destatis said last month.

The labour market could also come under pressure in the coming months following the loss of about 80,000 manufacturing jobs in 2019 and mass layoffs in the banking sector.

Data also released last week showed both factory orders and industrial production posting bigger-than-forecast drops in October, underlining both the contraction in manufacturing sector and worries that Germany was entering the new year in a fragile state.

The drop in monthly industrial production gathered pace in October, falling by a hefty 1.7 per cent with output also dragged down by the nation’s auto sector, which underpins about 2 million German jobs.

The industry is struggling to catch up with the demands for electric cars and to overcome the diesel scandal.

Car production fell 8 per cent in November compared with the same month last year, with exports down 10 per cent, according to the German Automobile Industry Association (VDA).

“German industrial production is still mired in recession,” said Andreas Rees, chief German economist with Italy’s Unicredit bank.

The downbeat start to the four quarter came after Germany only narrowly avoided recession in the third quarter after the economy posted a meagre 0.1-per-cent rise in the three months to the end of September after it shrunk in the second quarter.

Germany’s key economic surveys offered some hope that the economy could tip toe around a major downturn with the closely watched Munich-based Ifo research group’s business confidence edging higher in November.

But the London-based IHS Markit research firm said last month that its purchasing managers’ index (PMI) for private sector activity in Germany nudged higher in November but remained at one of the lowest levels recorded in the last six and half years.

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