China distorting German exports adding weakness to Euro growth

In March, we expect the German trade surplus to have amounted to €21.9bn, up from €19.5bn in February. Exports are expected to have increased by 0.2% MoM, following the rise of 1.4% MoM in February (-2.1%), while imports are expected to have decreased by 0.4% MoM, in line with signs of weak retail sales.

In Europe, Manufacturer's PMI for April that France and Greece produced readings of below 50.0 for the month, demonstrating an accelerated decline in factory production. Germany delivered a final reading of 52.1, Spain and Italy produced readings of 53.8 and 54.2 respectively. Currency traders await a general election on 7th May to elect the 56th Parliament of the United Kingdom.

While export data remain suppressed, temporary weakness in China linked to the New Year and in the US linked to weather and industrial action has probably distorted data temporarily in Q1. The weakening in Q1 exports looks particularly noteworthy in view of the significant weakening of the euro last year.

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