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German Trade Surplus Grows In November As Imports Fall Unexpectedly

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Germany's merchandise trade surplus grew in November to its biggest level in five months as imports fell unexpectedly, and exports decreased, giving further evidence of a slowdown in the biggest euro area economy.

The non-adjusted trade surplus grew to EUR 20.5 billion from EUR 18.9 billion in October, preliminary data from the Federal Statistical Office showed on Wednesday. Economists had expected a surplus of EUR 18.6 billion.

The latest surplus was the biggest since June, when the figure was EUR 22 billion.

On a seasonally and calendar adjusted basis, the trade surplus increased to EUR 19 billion from EUR 17.9 billion in October. That was also the biggest since June.

In November, the decline in imports outstripped the fall in exports.

Imports decreased a seasonally adjusted 1.6 percent from the previous month after a 0.8 percent increase in October. Economists had expected imports to remain unchanged.

On a non-adjusted basis, imports rose 3.6 percent year-on-year after a 10.8 percent surge in October.

Exports fell a seasonally and calendar adjusted 0.4 percent month-on-month following a 0.9 percent rise in October. Economists had forecast a 0.5 percent decline. The latest fall was the biggest in four months.

Non-adjusted exports were unchanged from the same month last year after and 8.7 percent increase in October.

"There currently simply seem to be too many crises in global trade for the German export sector to defy them," ING economist Carsten Brzeski said.

"Even the weak euro has done very little to lift German export performance."

Sales to the EU countries grew by 0.3 percent year-on-year, while exports to Eurozone decreased 0.4 percent. Imports from the EU rose 3.1 percent and those from the euro area increased 2.9 percent.

Shipments to the non-EU countries decreased 0.4 percent year-on-year, while imports from them grew 4.3 percent.

The current account surplus for November was EUR 21.4 billion versus EUR 26.4 billion a year ago. Economists were looking for a surplus of EUR 24.8 billion.

Recent economic indicators have pointed to the risk of the German economy sliding into a technical recession in the fourth quarter of 2018.

Industrial production decreased for a third month and manufacturing orders fell for the first time in four months in November.

The German economy shrunk for the first time since early 2015 in the third quarter and at the fastest pace in nearly six years, mainly due to weak exports and car sales. GDP fell 0.2 percent quarterly, marking the worst decline since the first quarter of 2013.

Another contraction in the fourth quarter would mean the economy has slipped into a technical recession, which is two consecutive quarters of negative growth.

A technical recession, if it happens, should be "the very final wake-up call to step up investments and structural reforms", Brzeski said.

Meanwhile, a strong labor market, favorable financing conditions and signs of a pick up in the automobile sector after the dampening from the switch to the WLTP emission tests regime, are likely to support economic activity in the coming months.

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