The German trade surplus unexpectedly increased in March as exports grew for the first time in six months giving hopes of gradual recovery in the largest eurozone economy.
The external trade surplus climbed to EUR 11.3 billion in March, a report from the Federal Statistical Office showed Friday. The trade surplus totaled EUR 8.6 billion in February and EUR 16.8 billion in March 2008. The increase in March trade surplus came as a surprise to economists, who were largely looking for a lower figure of EUR 8 billion.
Upon calendar and seasonal adjustments, the foreign trade balance recorded a surplus of EUR 8.9 billion in March, the same value as in February.
Exports grew by a seasonally and calendar adjusted 0.7% in March from February. Meanwhile, imported commodities increased 0.8%. Economists were looking for a monthly decline of 1.3% in exports and a 0.9% fall in imports.
At the same time, German exports and imports were 15.8% and 11.6% below their respective March 2008 levels.
According to provisional results of the Deutsche Bundesbank, the current account balance showed a surplus of EUR 10.2 billion in March versus EUR 6.8 billion in February. The current account surplus stood above the expected EUR 7 billion.
Germany dispatched commodities worth EUR 44.9 billion to the member states of the EU, while it received commodities worth EUR 38.7 billion from those nations. Around EUR 31.2 billion worth commodities were dispatched to the euro area nations in March and it received EUR 27.6 billion from those countries.
In March, factory orders registered an unexpected monthly increase of 3.3%, following a fall of 3.1% in February. The industrial production data is due today. Output is expected to drop 1.3% month-on-month in March, less than the 2.9% fall logged in February.
In its Spring Forecast, the European Commission predicted a contraction of 5.4% this year for the German economy. The commission projects a recovery with a real GDP growth of around 0.3% in 2010. Meanwhile, the German unemployment rate is projected to climb further to 8.6% next year.
European Central Bank Governing Council member Axel Weber said earlier this week that the German economy is not expected to grow before the second half of 2010. He noted that the recessionary trend in the coming months would not be as pronounced as it was in the past few months.
On April 29, the Federal Ministry of Economics and Technology said the economy is likely to grow in 2010 on export recovery and stimulus measures, while forecasting the worst contraction since the World War II for this year. The ministry estimates a 6% fall this year, before rising 0.5% in 2010.
On Thursday, the European Central Bank cut its benchmark interest rate to a new low and unveiled additional support measures as the 16-nation economy faces its worst recession since the World War II.
The Governing Council, the policymaking body of the ECB, reduced the interest rate on the main refinancing operations of the Eurosystem by 25 basis points to 1.00%.
It is widely believed that the central bank would hold fire for a long period after latest rate cut. The ECB has lowered interest rates by a total of three and a quarter percentage points since early October 2008.
In the press conference that followed the announcement, the central bank chief Jean-Claude Trichet said the central bank will proceed with its enhanced credit support approach and will conduct liquidity-providing longer-term refinancing operations with a maturity of 12 months.
Trichet also announced that the central bank will buy euro-denominated covered bonds issued in the euro area. He said the program is expected to be worth around EUR 60 billion.
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