German export growth stalls in July, euro area industrial production likely stabilized

German latest goods trade figures came in slightly weaker than expected, in line with the slightly weaker July production and orders data from the German industrial sector released earlier this week. After growing rapidly in recent months, the nation’s export growth effectively stalled in the summer, with the value of exports rising just 0.2 percent sequentially in July having dropped 2.7 percent month-on-month in June.

On the contrary, in line with strong domestic demand growth, the value of imports rose sharply by 2.1 percent sequentially to leave the goods trade surplus falling to below EUR 20 billion, the lowest level since the beginning of the year. However, on a three-month basis the growth rate of both exports and imports was comparatively subdued at just 0.4 percent three month-on-three month, the most subdued rate in nearly one year.

However, on an annual basis, reflecting strength in 2017, the rates of exports and imports stayed impressive, at 8 percent year-on-year and 9.4 percent year-on-year. Given positive leading indicators, a renewed momentum in German trade is expected in months ahead.

Meanwhile, rising momentum is also seen in the French industrial sector. In July, total industrial output had risen 0.5 percent sequentially while manufacturing output rose 0.3 percent sequentially. While that followed declines close to 1 percent sequentially in each measure in June, the underlying trends now appear to be strong with total production and manufacturing up 1.5 percent three month-on-three month, among the best readings since October 2015, and the annual rises of 3.7 percent year-on-year and 3.9 percent year-on-year respectively also close to the top of the range of the last six years.

Elsewhere, Spain’s industrial output dropped 0.3 percent sequentially to leave the annual growth rate close to 2 percent year-on-year, down from the earlier two months but bang in line with its average over the past 12 months.

“Looking at the data from the large member states released so far, on the whole the euro area industrial sector appears to have been broadly stable in July, having grown 1.2 percent Q/Q in the second quarter”, said Daiwa Capital Markets Research.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at -57.7389, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -151.061. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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