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Eurozone Trade Surplus Grows As Exports Rebound

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Eurozone's trade surplus grew in May led by a rebound in exports, which was not enough to entirely reverse the slump logged in the previous month. The outlook for European exports is likely to remain weak due to rising trade tensions and slowing global demand.

The seasonally adjusted trade surplus rose to EUR 20.2 billion from EUR 15.7 billion in April, preliminary data from Eurostat showed on Tuesday. Economists had forecast a surplus of EUR 17.5 billion.

Exports grew 1.4 percent month-on-month in May after a 2.5 percent slump in April. Shipments had grown in each month from December to March. Imports fell for a second straight month, down 1 percent in May.

The non-seasonally adjusted trade surplus increased to EUR 23 billion from EUR 16.9 billion in the same month last year. Shipments increased 7.1 percent annually and imports grew 4.2 percent.

The seasonally adjusted EU28 trade surplus grew to EUR 4 billion from EUR 0.9 billion in the previous month. Exports edged up 0.1 percent from the previous month, while decreased 1.7 percent.

Europe's rising trade surplus is set to annoy the US further, where President Donald Trump has accused the European Central Bank of currency manipulation and has threatened to slap tariffs on several goods from the continent, mainly automobiles.

For the January to May period, the surplus in the EU28 trade with the US increased to EUR 62.1 billion from EUR 55.4 billion in the same period last year.

Meanwhile, the deficit in the EU trade with China widened to EUR 76.7 billion from EUR 69.2 billion.

"Weakening global growth and the trade conflict uncertainty have clouded the outlook for some time and eurozone businesses have been indicating that their competitiveness outside of the EU has been faltering over recent quarters, which is usually closely related to growth in real exports," ING economist Bert Colijn said.

"For now, declining demand among large export markets has been limited to Turkey and South Korea, but expectations for the quarters ahead remain rather cautious."

In the first quarter, the EU export growth was mainly supported by the intense stockpiling in the UK ahead of the original Brexit deadline of March 29.

The second quarter GDP outcome is likely to be poor, which will be something the European Central Bank would consider ahead of the July 25 policy session, the economist added.

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