U.S. News

German Exporters Shrug Off Euro's Surge in April

By Reuters

German companies defied the euro's surge against the dollar to achieve strong export expansion in April, although signs are mounting that the pace of growth has eased, preliminary data showed on Friday.

Germany's trade surplus widened by more than expected in April as export growth outpaced a rise in imports, Federal Statistics Office figures showed.

This boosted hopes that net trade will fuel economic growth again in the second quarter after it held back gross domestic product (GDP) expansion during the January-March period.

In seasonally adjusted terms, the trade surplus was 15.8 billion euros, compared with an upwardly revised 15.6 billion in March. Economists polled by Reuters had given a mid-range forecast for an April surplus of 15.4 billion euros.

Exports rose 0.9% on the month in adjusted terms to 79.8 billion euros ($107.7 billion), the Office said. Imports increased by 0.8% to 64.0 billion euros. Both gains were lower than had been expected by analysts.

Matthias Rubisch, an economist at Commerzbank, said the latest data showed export growth was losing momentum.

"Companies aren't able to sell as much to the United States especially, which is not that surprising given the weaker growth over there," he said. "Imports were not that strong and

therefore it looks like we will have a positive contribution to growth from foreign trade in the second quarter."

Germany's export volumes have remained fairly constant since a big surge in September, the Office's data showed.

Euro Strength

Many companies are still seeing strong demand from abroad.

German industrial group MAN last week booked an order from Russia's JSC TransKreditBank for 1,000 heavy trucks.

However, a number of firms have said the euro's rise against the dollar has curbed business. The single currency hit a record high above $1.3680 in late April.

A breakdown of the trade data showed during the first four months of the year, exports increased 11.6% compared with the same period in 2006. Imports were up 8.3%.

Exports to countries in the European Union rose 13.7% during the period, and to countries outside the region by 7.8%. By contrast, imports from the bloc rose 11.6% but by just 2.7% from non-EU countries.

The figures follow a run of predominantly positive economic reports from Europe's largest economy, with business morale holding near a post-reunification high in May.

The economy has, however, shown some signs of running up against its limits. A survey of purchasing managers released last Friday indicated that growth in Germany's manufacturing sector slowed to its weakest pace in 15 months in May.

Manufacturing orders fell by more than expected in April, while unemployment rose slightly in May to end a run of 13 consecutive monthly falls. A survey also showed construction activity declined last month for the second month in a row.