The marked increase in Eurozone trade surplus in May, which was the result of a further fall in imports, does not show that the economy is improving, but only masked the generally worrying trend, IHS Global Insight Chief European and UK Economist Howard Archer said Tuesday.
Data from the Eurostat showed that the seasonally adjusted trade surplus widened to EUR6.3 billion in May from EUR4.5 billion in April. Imports dropped a further 0.9 percent sequentially after falling 1.5 percent in April.
According to the economist, even allowing for import values being brought down by lower oil prices, May data points to weak Eurozone domestic demand.
Exports, meanwhile, edged up just 0.3 percent month-on-month, after falling 1.4 percent in April, reinforcing concerns that weakened global growth is hitting foreign demand for Eurozone goods.
Supporting data from the manufacturing purchasing managers' survey showed that export orders for June contracted at the sharpest rate since last November.
On the positive side, however, the softer euro is boosting Eurozone exporters' competitiveness while recently reduced input prices are helping their margins, the economist added.
by RTT Staff Writer
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