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German trade surplus slightly declined in June 2016

German trade surplus surpassed expectations, reporting a slighter than projected decline in June 2016 after the exports again returned to growth. The trade surplus is closely monitored, as an indicator of the strength of the economy. It shrank unexpectedly in May, when Germany has sold fewer goods and services abroad. In June, the trade surplus of the largest economy in Europe declined to 21.7 billion EUR, from the 22.2 billion EUR in May.

The exports rose by 0.3% MoM to 99.8 billion EUR in June, while imports grew faster by 1.0% MoM to 78.2 billion EUR. In unadjusted data, exports grew by 1.2% compared to June 2015 to 106.8 billion EUR due to 6% sales growth in other member states of the European Union outside the Eurozone. In comparison, sales to Eurozone countries increased only slightly by 0.1% compared to the same period last year, while sales to non-EU countries dropped by 0.4%.

The overall German current account surplus expanded to 137.8 billion EUR for the first six months of 2016 from 116.7 billion EUR the previous year with a slight deterioration in the services account, while all other components strengthened over the year. The widening surplus illustrates that substantial net capital outflows are needed to prevent upward pressure on the Euro.

Presented a day after figures showed industrial production recovery after three weak months, it is unlikely trade data to reinforce expectations for the estimates of economic growth in the second quarter, which will come out on Friday.

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