At least there is one reliable source of growth. German exports continued their recent upward trend in December, increasing by 3.0% MoM, from 1.1% MoM in November. At the same time, imports increased by 4.5% MoM, after a 6.2% decrease in November. As a consequence, the trade surplus narrowed to 13.5 billion euro, from 17.2 billion euro in November. Since March last year, German exports have increased by more than 10%.
All recently released data indicate that the recovery has slowed down in the fourth quarter. The first estimate will be released on Friday and is likely to show only a moderate growth. However, only at first glance would this mean that the recovery has ended before it really got started. At second glance, the picture looks much better. The inventory cycle is still turning and should lead to a significant growth impulse in the coming quarters. Moreover, stock building in China is still continuing and the upshot of public finance problems in the Eurozone is that no one talks about export-hindering euro strength anymore. In nominal effective terms, the euro exchange rate has lost more than 3% since the beginning of the year and is now back at its level of February 2009.
Today’s numbers highlight once again that the German economy can almost always rely on a helping hand from the export sector. The road might be bumpy but it is the road to recovery and not a dead-end street.