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German Trade Surplus Bigger than Expected in January

Germany's trade surplus grew more than expected in January after a surprisingly big drop in
imports, Federal Statistics Office data showed on Friday.

In seasonally adjusted terms, the surplus was 15.7 billion euros ($20.7 billion), compared with an upwardly revised 14.8 billion euros in December. Economists in a Reuters poll had forecast a January surplus of 15.0 billion euros (ECONDE).

Exports rose 0.1% on the month in adjusted terms to 78.7 billion euros, while imports fell 1.5% to 63 billion euros. Economists had predicted exports would rise 0.5% on the month, with imports seen down 0.4%.

Joerg Loeschow, an economist at WestLB, said exports were still at a very high level in January and would continue to support economic growth this year.

"The outlook for exporters remains positive because global growth is still strong, the euro is not strengthening further and price competitiveness is high," he said.

Germany, the world's biggest exporter of goods, has profited from several years of solid global growth, selling record volumes of cars, chemicals, machinery and other products to customers abroad.

BMW, the world's largest premium car maker, said on Thursday it was raising its dividend by more than 9% after record 2006 earnings.

Graphite electrode maker SGL Carbon posted better than expected 2006 net profit on Thursday and predicted a gain in sales and earnings this year.

Manufacturing Orders

The German trade figures follow official data for January showing a surprise fall in German manufacturing orders, a bigger gain in industrial output than economists had expected and a large drop in retail sales.

Economists attributed the decline in spending by consumers to Jan. 1's three-point increase in sales tax to 19%, which is expected to dent economic growth in the first three months of this year.

However, expansion is expected to pick up again in subsequent quarters and annual growth is seen at around 2% after last year's six-year high of 2.7%.

Ralph Solveen, an economist at Commerzbank in Frankfurt, said the trade figures were surprisingly good. He had been expecting a correction after the strong performance in the October to December period.

"But we are still below the average for the fourth quarter in January and that suggests that we'll see a negative contribution from net trade in the first quarter," he said.