EMU Trade Trends Reveal Export Weakness
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EMU trade trends show a decline in both exports and imports in May; exports fall harder than imports. Exports decline in May, but log a small increase over six months; they are generally contracting or weak on all horizons. Contrarily, imports fall over 12 months, then step up to grow by 2.3% over six months and even faster growing at a 7.2% annual rate over three months.
We can divide export trends into manufactured goods vs. nonmanufactured goods. Manufacturing exports fall over three months, six months, and 12 months. The declines are in a rough range of -1.5% to -2.5%, annualized. Exports of nonmanufactured goods grow over all horizons but are also slowing steadily from 9.9% over 12 months to 4.6% at an annual rate over three months.
On the import side of the ledger, manufacturing imports are gaining pace and accelerating. Growth logs -8.1% over 12 months, then registers at a -1.8% annual rate over six months before imports break out to grow at a 5.5% annual rate over three months. Imports of nonmanufactured goods have generally stepped up from a 1.8% growth rate over 12 months to a 12.9% pace over six months then stepping back to a still-strong 11% annual rate over three months.
Export and import data for the EMU is for the region’s trade with areas outside of the EMU. All intra-community trade is netted out. The strength in imports suggests that some recovery may be afoot in the community with both imports of manufactured and nonmanufactured goods improving. Exports, on the other hand, show that the EMU export markets may still be quite weak since manufacturing exports are widely contracting and exports of nonmanufactured goods are slowing. Both hint at demand weakness.
Select data for a few European economies show German exports and imports both declining and both decelerating. France shows a tendency for imports to slide as its exports gain footing and accelerate. U.K. exports and imports are transitioning from declines over 12 months to increases over three months. Export data show a slippage with growing declines and weakness for Finland and Portugal. In contrast, Belgian exports are gathering strength and accelerating modestly, sequentially.
Trade trends show mixed results with manufacturing data underlining ongoing weakness while manufacturing imports are growing at a stepped-up, strong pace. The EMU trade balance has been relatively steady over 12 months, six months, and three months. The balance on manufactured goods is exceptionally steady at a surplus of €37bln to €39bln. The balance on nonmanufacturing trade has been steady over 12 months, six months and three months at €23bln.
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Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.