Euro area’s trade remains soft in November, net trade likely to negatively contribute to GDP in Q4

Euro area’s trade continued to be soft in November. Weakness in export mainly led to the economic deceleration in the euro area in 2018, with net trade having subtracted from euro area GDP growth in each of the initial three quarters of 2018.

The goods trade figures for November were underwhelming, with the value of exports falling for the second month in three and by 1 percent on a sequential basis. Therefore, with marked softness still in shipments to major emerging markets such as Turkey, Brazil and Russia, export values rose just 1.6 percent year-on-year, the weakest annual rate since March. However, the value of imports dropped as well, and by a stronger 1.9 percent sequentially, to be up 4.5 percent year-on-year.

Thus, on average over the initial two months of the fourth quarter, the value of exports rose 1.7 percent on the third quarter’s average while imports rose 2 percent on the same basis.

“Given relative price shifts - not least the significant fall in the oil prices - growth in the volume of imports likely outpaced that of exports over this period. And with December's data likely in due course to reveal a notable deterioration in shipments to China, there is a significant risk of a fourth negative contribution to GDP growth in a row from net trade in Q4”, said Daiwa Capital Market Research.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was bearish at -81.5837, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -19.5249more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex