German exports rose for the fourth consecutive month in November and industrial orders surged more than expected - mostly based on overseas demand - in a sign that Europe’s largest economy is benefiting from a nascent global upturn.
But the data, coinciding with a visit on Wednesday by U.S. Treasury Secretary Jack Lew who has criticized Germany’s export-driven model, could fuel allegations Berlin is not doing enough to help its European partners by stimulating domestic demand.
Germany has come under international pressure for relying too heavily on foreign markets - a criticism that was expected to play a role again in Lew’s talks with German Finance Minister Wolfgang Schaeuble in Berlin.
Data from the Federal Statistics Office showed trade picked in November up especially with European Union countries outside the euro zone, while growth in demand for Germany’s industrial goods was also stronger from beyond the single currency area.
“Growth in orders from outside the euro zone in particular leads to the conclusion that the global economy is continuing to recover - and Germany’s export-oriented industry benefits from this especially,” said VP Bank chief economist Thomas Gitzel.
Seasonally-adjusted exports rose by 0.3 percent on the month, largely in line with the consensus forecast in a Reuters poll for a 0.35 percent increase. Imports dropped 1.1 percent, missing a consensus estimate for a 0.3 percent rise.
“Even if November is a bit weaker than the strong October - especially on the imports side - the data shows that the fourth quarter is picking up because of a German and global recovery,” said Christian Schulz, senior economist at Berenberg Bank.
Industry orders rose a seasonally-adjusted 2.1 percent on the month, outstripping a 1.5 percent increase forecast in a Reuters poll and following a revised 2.1 drop in October.
“Positive stimulus for the development of order intake currently comes mainly from abroad,” said the Economy Ministry.
Domestic industry orders rose 1.9 percent on the month and foreign orders 2.2 percent. Demand from the euro zone failed to grow but from outside the bloc it increased by 3.5 percent.
The seasonally-adjusted trade surplus widened to 17.8 billion euros from a revised 16.7 billion in October, just below a forecast 18 billion euros. The current account surplus rose to 21.6 billion euros from 18.8 billion in October.
In October, the U.S. Treasury said in a report to Congress that Germany wasn’t doing enough to spur its domestic economy, and that its dependence on exports was putting downward pressure on wages and prices around the world.
German politicians were furious, saying their export success reflects German competitiveness and a highly-skilled workforce. Schaeuble will use strong German retail sales and data showing a solid labour market to underpin the argument that Germany is not living off the weakness of its euro zone peers and that export growth is driven increasingly by countries outside of Europe.
While exports to non-EU countries stagnated in November compared to a year ago, those to EU countries outside the euro rose by 4.9 percent. Exports to the currency union ticked up by 0.1 percent.
“This year’s data shows that less and less of Germany’s trade surplus is coming from the euro zone. Germany has made its contribution to the reduction of imbalances in the euro zone,” said Schulz at Berenberg Bank.
Germany argues that it has more than halved its current account surplus with the euro zone as a share of gross domestic product since 2007 and that a surplus should be treated differently to a deficit.
Stats office figures have suggested trade will subtract from rather than contribute to economic growth in 2013, while domestic demand, albeit still weak, will likely drive a modest expansion. (Reuters)