German imports hit record

Germans imported more goods in May than ever before, data showed on Friday, boosting hopes that surging domestic demand in Europe's biggest economy will trickle down to weaker eurozone states in the form of healthier trade balances. Seasonally adjusted imports rose 3.7 percent over April to 76.7 billion euros, an absolute record, according to figures from the federal statistics office in Wiesbaden.
"With the consumption climate improving on the back of falling unemployment and rising income, domestic demand and imports should expand stronger than exports, helping other European countries to rebalance their external sectors," Berenberg Bank economist Christian Schulz wrote on Friday. Peripheral eurozone countries need to boost exports to offset weak domestic demand that is being aggravated by austerity measures as Greece and other countries try to tackle a debt crisis.
France's economy is also showing signs of slowing and the central bank on Friday trimmed its second-quarter growth forecast for the eurozone's second-biggest economy to just 0.2 percent quarter on quarter. Demand abroad for German goods and services remained strong, helping the trade surplus widen to 12.8 billion euros, exceeding a Reuters poll of 19 economists that forecast 12.0 billion.
But manufacturers' order books suggest foreign sales will dip as the year progresses, notably to the emerging economies that have been hoovering up an increasing proportion of German exports. Export orders fell 5.8 percent in May. "The general picture for exports remains intact: (but) the dynamism will dissipate, since the stimulus from China will decline" as that country's economic growth rate eases, Andreas Rees, economist at Unicredit, said.
Meanwhile, German imports from other parts of Europe have risen steadily, easing concerns among its eurozone partners that its dominance as an exporter nation has damaged their trade balances. Unadjusted statistics office data for the first four months of the year showed German imports from Italy rose by nearly 20 percent and from Portugal by 17 percent.
But news on that front was bleak for Greece, whose exports to Germany fell 0.8 percent. Germany's buoyant domestic climate was reflected in separate statistics office data showing domestic insolvencies in Germany declined year on year in April for the third month in a row. They fell 8.2 percent, the fastest rate of decline in nearly two and a half years.
German exports in May rose a consensus-beating 4.3 percent month on month, to 89.5 billion euros, just shy of the record level posted in March. Exports outside the European Union - including the BRIC nations (Brazil, Russia, China and India) and other emerging economies - rose an unadjusted 23.8 percent over May 2010, the statistics office said.