BERLIN (Reuters): German exports posted their biggest fall in half a year in October, pushing the trade surplus sharply lower in a sign that Europe’s largest economy weakened entering the fourth quarter of 2011 as the debt crisis hammered key euro zone export markets.
Exports fell by 3.6 percent from a month earlier, their largest decline since April, compared with the poll forecast for a fall of 1 percent. Imports also shrank by their biggest amount in six months, dipping 1.0 percent compared with an expected 0.5 percent rise.
Data from the Federal Statistics Office on Friday showed the seasonally-adjusted trade surplus falling to 12.6 billion euros from a revised 15.1 billion euros in the previous month. That compared with a consensus forecast for 14.3 billion in a Reuters poll of economists.
“We are seeing the beginning of a strong hit to German exports. It is telling that the exports fell by more than the imports. Domestic demand is stronger than that from abroad. It’s the euro crisis,” said Berenberg Bank’s Holger Schmieding.
“If our neighbours aren’t doing well, Germany can’t remain an island of tranquility,” the economist said.
The unadjusted data showed exports to euro zone countries dipping 0.4 percent in October compared to the previous year, a much weaker performance than to countries outside the currency bloc.
Exports to non-euro EU countries rose 3.1 percent on an annual basis, while those to countries outside the EU pushed up by 8.3 percent.
Many economists see Germany teetering on the brink of recession due to the euro zone debt crisis, which is depressing confidence and starting to spill over into the real economy.
While the country should still see economic expansion of 3 percent this year after a strong start to 2011, the government has nearly halved its forecast for 2012 growth to 1 percent.
Berlin is now relying on domestic demand to shore up the economy.
Data has given a mixed picture of German economic activity and some cause for optimism.
According to the latest Ifo index business sentiment rose unexpectedly in November for the first time in nearly half a year. Consumers have also shown themselves to be surprisingly resilient, deciding to fork out on durable goods rather than leave their money in the bank at paltry interest rates.
German industrial output beat expectations to rise 0.8 percent on the month in October, bouncing back after a steep fall in September, and orders data was also much stronger than expected. However, according to recent Purchase Managers’ Index (PMI) data for November, the Germany manufacturing sector suffered its sharpest fall in activity since mid-2009.