German exports claw back ground in November

AP News
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Posted: Jan 09, 2012 8:07 AM
German exports claw back ground in November

Germany's exports rose strongly in November, partially offsetting a sharp drop the previous month, according to provisional figures. But a dip in industrial production darkened the picture for Europe's biggest economy.

Germany's economic fortunes, as well as of those of the 17-nation eurozone, remain hugely dependent on both, so economists will be closely monitoring a raft of indicators over the coming weeks to see if it is heading toward a recession.

If Germany avoids an outright recession, that will help shore up the eurozone economy, which is struggling in the face of a debt crisis that has seen Greece, Ireland and Portugal bailed out and is threatening bigger economies like Italy and Spain.

The picture on the exports front was fairly upbeat after the Federal Statistical Office agency reported they rose 2.5 percent to euro90.7 billion ($115.88 billion) in November, adjusted for seasonal and calendar factors. With imports dropping 0.4 percent to euro75.7 billion, the country's trade surplus swelled to euro14.3 billion from euro11.5 billion in October.

Exports are a key pillar of Germany's economy and have helped keep it growing even as the eurozone crisis over too much government debt has gathered intensity over the past two years.

The export rise comes after the office reported a revised 2.9 percent drop in exports to euro88.5 billion in October. Compared with a year earlier, exports in November were up 8.3 percent in unadjusted terms.

Downbeat news came in the form of a drop in industrial production by 0.6 percent during the month, slightly more than the 0.5 percent predicted by financial market analysts.

Economist Alexander Koch at UniCredit noted that auto manufacturing appears to have shifted into a lower gear in the final weeks of the year after pushing output higher in the third quarter, when auto sector companies canceled traditional summer holiday plant shutdowns.

Together with a recent stabilization in other economic indicators and with stronger construction activity in the month, Koch said, the industrial production numbers "support our view that no deep contraction in German manufacturing is imminent" and predicted 0.2 percent growth for the fourth quarter from the quarter before.

Jennifer McKeown, senior economist at Capital Economics in London took a more skeptical view, saying that the drop in industrial output meant "it seems very likely that German GDP fell in the fourth quarter."

The weaker production data suggested that some of the export demand was being met by goods already in company's inventories.

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Associated Press Writer David Rising contributed to this report from Berlin.