German Current Account Declines in July

Germany's seasonally unadjusted current account fell 7.1 billion euros in July from June and 3.4 billion euros from July, 2007. In the GERMANY database, the monthly data on the current account are available only in seasonally unadjusted terms. In the G10 data base, however, the current account has been seasonally adjusted by Haver Analytics. On the seasonally adjusted basis the monthly decline in the current account was much smaller--3.0 billion euros.

Germany's balance on trade in goods is the largest component of its current account balance as can be seen in the first chart that compares the current account balance with the balance on trade in goods (both on an unadjusted basis). Frequently the surplus on trade in goods is larger than the current account surplus. The monthly balance on trade in goods and in exports and imports are available on both a seasonally adjusted and unadjusted basis in the GERMANY and G10 databases.

The balance on the seasonally adjusted trade in goods declined by 6.5 billion euros from 18.2 billion euro in June to 11.8 billion euro in July. Exports declined by 1.4 billion euros, and imports increased by 5.0 billion euros. Exports and imports are shown in the second chart. The data on the commodity classification of exports and imports and the origin of imports and destination of exports are not yet available. The decline in exports is easier to explain than the rise in imports. Foreign manufacturing orders (shown in the third chart) have been declining since late last year, presaging a decline in exports. Declining oil prices and lower economic activity, however, would seem to suggest lower, not higher imports. The explanation of the rise in imports will be apparent when the more complete balance of payments data become available some time next week.