Wires

UPDATE 2-German export leap likely to cushion Q3 slowdown

(Adds further comment, background, details)

By Michelle Martin

BERLIN, Oct 8 (Reuters) - German exports rose unexpectedlyin August, underscoring the continued resilience of Europe'slargest and traditionally export-oriented economy despite theeuro zone crisis and suggesting a third quarter slowdown may bemoderate.

Seasonally adjusted exports jumped 2.4 percentmonth-on-month, far outperforming expectations for a drop of 0.5percent and beating even the highest forecast in a Reuters pollof 17 economists for a 0.5 percent rise.

"It is incredible how German exports are winning in such atough environment," said Andreas Scheuerle at DekaBank.

"The strongest areas of growth recently came from Asia andEurope outside the euro zone. The data should influenceGermany's economic output positively in the third quarter."

Germany's economy quickly bounced back from the globalfinancial crisis in 2008/9 and for a long time seemed imperviousto the euro zone's troubles but growth slowed to 0.3 percent inthe second quarter from 0.5 percent in the first as firms heldback on investments due to uncertainty in the 17-nation bloc.

Many economists now predict a German contraction in thethird and possibly fourth quarters, though they said Monday'sforeign trade data would help cushion the slowdown in the thirdquarter.

Imports inched up a mere 0.3 percent, raising questionsabout the level of domestic demand in Germany, which manyeconomists had expected would prop up growth during the eurozone crisis and a global economic slowdown.

But the figures chime with data last week which showedindustrial orders dropped in August as a slide in domesticdemand outweighed an improvement in euro zone contracts.

The seasonally-adjusted trade surplus widened to 18.3billion euros from an upwardly revised 16.3 billion euros inJuly. The consensus forecast was for it to narrow to 15.3billion euros.

STABILISING

A breakdown of data showed that imports from the euro zoneclimbed by 1.1 percent on the year in August, compared with amore muted 0.4 percent overall year-on-year rise in imports anda 0.4 percent drop in shipments to non-euro zone countries inthe European Union.

The data also showed that Germany found it harder to findbuyers for its goods in the euro zone in August compared with ayear ago, with shipments to countries in the troubled bloc downsome 3.1 percent as several governments implement harshausterity measures.

But Germany found buyers outside the European Union, withexports to other markets up by 13 percent on the year.

Some economists, however, warned that the increase inexports was just a one-off effect.

"The trend for the coming months points rather to aweakening," said Ulrike Kastens at Sal Oppenheim.

"Nevertheless the increase in exports in August should havea stabilising effect on economic performance in the thirdquarter."

Recent data from Europe's growth engine and paymaster hasbeen rather mixed, with business sentiment slipping, the privatesector contracting and unemployment rising, but consumersentiment has held steady and retail sales have edged up.

Purchasing managers's surveys last week showed themanufacturing and services sectors shrinking, with businesssentiment among service providers sliding to its lowest level in3-1/2 years.

Data due out later on Monday is expected to show that Germanindustrial output fell by 0.8 percent on the month in August.

(Reporting By Michelle Martin and Stephen Brown, editing byGareth Jones)

((sarah.marsh@thomsonreuters.com)(+ 49 30 2888 5226))

Keywords: GERMANY ECONOMY/