German trade surplus declines in May on shrinking exports

Germany’s trade surplus declined in May following a sharp shrink in exports, compared to that in April. This is, however, an indication that Europe's largest economy nosedived in the second quarter after a strong start to the year.

The trade surplus, adjusted for seasonal swings and calendar effects, narrowed to 22.2 billion euros (USD24.6 billion) in May from a record high of EUR24.1 billion in April. German exports fell sharply for the month and in seasonally-adjusted terms, there was a 1.8 percent decline, while there was a 1.5 percent increase over the first five months of the year.

The overall German current account surplus expanded to EUR115.6 billion for the first five months of 2016 from EUR104.5 billion the previous year as the primary income surplus widened. Further, there was a 2.1 percent increase in exports to EU countries for May with a 3.5 percent increase for the first five months of 2016. However, exports outside the EU declined 1.3 percent for the first five months of the year, but with annualised growth for May.

German competitiveness has been damaged in the UK market following the UK referendum vote and there has been further unease within Germany is expected if the Chinese yuan weakens further, which could undermine shipments in the key auto sector.

Meanwhile, the out-performance within the EU will maintain speculation that Germany is gaining market share within Europe, which will limit the scope for trade gains in countries such as Italy and France.