Financial Professionals


German Exports & Imports


In our June market calendar “The Table Setter,” I highlighted the significance of German economic data. Weakness within the German economy will pressure the governing Christian Democratic Party to agree to concessions for sharing the eurozone’s massive debt. The release of this week’s data presents evidence of troubling weakness.
Wednesday, June 6, 2012
•   Industrial Production declined 2.2% month-on-month, below the estimate for a decline of 1.0%
      o   Last month’s figure was revised lower from +2.8% to +2.2%
•   Industrial Production declined 0.7% year-on-year, below the estimate for a rise of 0.9%
      o   Last month’s figure was revised lower from +1.6% to +1.4%
Friday, June 8, 2012
•   Exports declined 1.7% month-on-month, below the estimate for a decline of 0.7%
      o   Last month’s figure was revised lower from +0.9% to +0.8%
•   Imports declined 4.8% month-on-month, below the estimate for a decline of 0.1%
      o   Last month’s figure was revised lower from +1.2% to +0.9%
Next up
•   Tuesday-Wednesday, June 12-June 13       German Christian Democratic Party and Social Democratic Party meetings to discuss their respective euro crisis positions
•   Sunday, June 17                                       Greek elections
•   Thursday, June 21                                     German PMI Manufacturing
•   Friday, June 22                                          Italian Prime Minister Mario Monti hosts France’s Hollande, Germany’s Merkel, and Spain’s Rajoy in Rome
•   Friday, June 22                                         German IFO Business Climate & Expectations
•   Friday, June 28                                          EU Brussels Summit
COMMENTARY:  This week the ECB assured the markets that it stands ready to provide further liquidity if needed. It cannot, however, protect solvency. Fiscal unity from European heavyweights must orchestrate regional solvency insurance. Weakening domestic economic data will force the hand of the ruling Christian Democrats to moderate their tone toward the middle. They face a domestic challenge from the opposition Social Democratic Party, which supports growth measures, not austerity. In the eurozone, the French provide the Christian Democrats with growth versus austerity opposition. I expect the process will continue to muddle along until the markets and weakening economic data force a compromise. This week’s German economic data did not help the austerity argument.
Continue to monitor Germany’s economic data. What may not be so good for their economy may actually be good for a European resolution….

German Industrial Production Month-on-Month, Prior 52 Weeks

Source: Bloomberg
German Industrial Production Year-on-Year, Prior 52 weeks

Source: Bloomberg
German Exports Month-on-Month, Prior 6 months

Source: Bloomberg
German Imports Month-on-Month, Prior 6 months

Source: Bloomberg


Past performance is not a guarantee of future results.

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