German export rise ‘no reason for euphoria,’ says angst-gripped industry

A worker cleans big machine parts in Goeppingen, Germany. (DPA via AP)
Updated 10 September 2019

German export rise ‘no reason for euphoria,’ says angst-gripped industry

  • Exports rise 0.7% m/m, imports fall 1.5%
  • Readout bucks expectations for exports to decline

BERLIN: German exports unexpectedly rose in July, data showed on Monday, but business groups said tariff disputes and Brexit uncertainty still posed risks to Europe’s largest economy as it teeters on the brink of recession.
Exports rose 0.7% in July on a seasonally adjusted basis, while imports fell 1.5%, the Federal Statistics Office said. The trade surplus rose to 20.2 billion euros ($22.3 billion) after a downwardly revised 18.0 billion euros the month before.
A Reuters poll of economists had pointed to a 0.5% drop in exports and a 0.3% fall in imports, while the trade surplus was expected to come in at 17.5 billion euros.
“The small rise in exports in July is no reason for euphoria about foreign trade,” said Volker Treier, economist at the DIHK Chambers of Industry and Commerce.
“Uncertainties persist for business, mainly due to the smoldering global trade conflicts and the still unclear Brexit (path).”
White House economic adviser Larry Kudlow said on Friday that the US-China trade conflict could take years to resolve, although Washington wants “near term” results from talks in September and October.
Monday’s stronger-than-expected German export figures cut against the grain of a recent run of weak data from Europe’s largest economy, which has fueled concerns that it could tip into recession in the July-September period.
Against that backdrop, the European Central Bank is expected to deploy fresh stimulus at its policy meeting on Thursday.
Germany’s gross domestic product contracted by 0.1% quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below-average demand from China.
Economists generally define a technical recession as at least two consecutive quarters of contraction.
Monday’s data showed that in the January-July period, German exports rose by 1.0%, with the strongest contribution coming from markets beyond the European Union, which registered growth of 2.9%.
The BGA foreign trade association said that in contrast to business in Europe, which was being hampered by Brexit uncertainty, business with the United States was going well.
“But this is no reason to give the all-clear, because the many risks and confrontations in foreign trade and the general economic slowdown persist,” BGA President Holger Bingmann said.
Chancellor Angela Merkel said on a visit to Beijing on Friday that the China-US trade war was affecting the whole world and that she hoped it would be resolved soon.
With its sales abroad hit, a global economic slowdown and an increasingly chaotic run-up to Brexit, the bulk of Germany’s growth momentum is now being generated domestically — a dependency that leaves it exposed to any weakening of the jobs market.
Seasonally adjusted unemployment rose in August, eroding a pillar of growth that has helped support Germany’s traditionally export-driven economy.
The government expects economic growth to slow to 0.5% this year from 1.5% in the previous year. This would be the weakest expansion since 2013 when the euro zone struggled amid a sovereign debt crisis.
Commenting on the July trade figures, ING economist Carsten Brzeski said: “This morning’s trade data brings a very weak ray of sunshine. Nothing more but luckily also nothing less.”


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.